The Kenya Revenue Authority (KRA) will start enforcing new IMEI registration rules for mobile devices starting January 1, 2025.
This initiative requires all mobile devices either assembled in Kenya or imported for sale, testing, or any other purpose, to have their International Mobile Equipment Identity (IMEI) numbers registered in a national portal monitored by KRA.
All importers and assemblers will be required to submit comprehensive import details, including accurate model descriptions, quantities, and IMEI numbers of mobile devices, through KRA’s Customs portal.
The Kenya Revenue Authority, explained
The Kenya Revenue Authority (KRA) is tasked with collecting a wide range of taxes to support government revenue.
These include income tax on individuals and businesses, VAT on goods and services, excise duty on specific items like alcohol and tobacco, customs duty on imports and exports, and capital gains tax on property sales.
KRA also imposes a stamp duty on property transactions, a digital services tax on foreign digital platforms, and a betting and gaming tax. These responsibilities extend to local and foreign betting markets and online casinos, creating a more streamlined approach to tax compliance across sectors.
What the policy intends to achieve
This policy is aimed at increasing tax compliance in the telecommunications sector. Adherence to local regulations will also involve obtaining permits from the Communications Authority of Kenya (CA).
Importers, manufacturers, and network providers must ensure that all devices connected to their networks meet compliance standards, with any non-compliant devices facing restrictions or potential blacklisting.
The notice from the CA stated that all mobile phones would be required to reveal the IMEI number present in their respective documents submitted to the taxman.
“This disclosure is mandatory for the registration of the devices in the National Master Database on Tax-compliant devices,” added the CA. The IMEI number is a unique 15-digit identifier assigned to each mobile device, and it’s often considered the device’s “fingerprint.” It’s the number used to locate lost or stolen devices and track them for security purposes.
“KRA is mandated to collect revenue on behalf of the Government of Kenya and administers various tax laws, including the East African Community Customs Management Act (EACCMA, 2004),” KRA stated.
The taxman pointed out that mobile devices are classified as restricted imports under EACCMA and, therefore, require regulatory permits from the CA.
What the new rule means concerning data privacy issues
The KRA’s notice, which sets a compliance deadline by the end of the year, has sparked concerns among the public and privacy advocates regarding potential infringements on user privacy.
The leading telecommunications provider in Kenya, Safaricom, recently responded to the upcoming rule. The mobile network operator clarified that it had not granted the Kenya Revenue Authority (KRA) access to its subscriber database, hinting at potential tensions between the telecommunications giant and the tax authority.
On Thursday 7th, Safaricom’s CEO Peter Ndegwa emphasized the company’s commitment to safeguarding customer data privacy, even as it works with KRA on policy measures aimed at expanding the tax base and enhancing compliance.
Speaking during the company’s half-year results in Nairobi, Ndegwa said, “The intention of the KRA is to broaden the tax base and to ensure that all devices bought in Kenya pay taxes.”
He added that the delivery method implemented should ideally be managed by the regulator in a way that avoids inconveniencing subscribers, while also ensuring the protection of individual privacy.
The CEO further stated that while IMEI numbers are currently kept confidential, there was no intention to disclose this information in the future, and he expressed uncertainty about how the KRA planned to handle this.
He also pointed out that in other countries, authorities have approached mobile network operators by requesting a list of untaxed devices rather than seeking direct access to subscriber data.
He suggested that the KRA should try to incorporate some of this feedback in shaping its approach.
KRA versus Safaricom
The Kenya Revenue Authority (KRA) has persistently aimed to access M-PESA subscriber and merchant data to integrate it into the national tax registry, seeking to capture tax revenue from the extensive daily transactions amounting to hundreds of billions conducted on the platform.
According to the latest data from the regulator, Kenya recorded 68.8 million active SIM subscriptions as of June this year. This translates to a mobile penetration rate of 133 percent, primarily due to many users holding more than one SIM card.
M-PESA continues to lead as Kenya’s top mobile money transfer platform. It serves 33.5 million active monthly users and has generated Kes 77.2 billion in revenue over the six months ending in September 2024.
Ndegwa expressed that it’s crucial for their customers to avoid any inconvenience from new policies by the taxman. He noted that Kenya has made substantial progress in digital advancement and emphasized the importance of government initiatives that support this growth.
While KRA seeks to expand the tax base, Ndegwa suggested they should do so in a way that doesn’t hinder Kenya’s digital progress.
Final thoughts
The new rule by the Kenyan government, which is set to be implemented starting January 1, 2025, aims to strengthen tax compliance and bolster the integrity of Kenya’s mobile device market while also looking to increase the taxman’s revenue collection.
However, it remains to be seen whether KRA will introduce the new policy in a way that protects user privacy and respects public concerns over data security while achieving its tax goals.