Nokia Phone Sales in Kenya Fall Falling Imposition of Sales Tax

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Nokia says that its sales in East Africa fell by 20 percent after the Kenyan government imposed sales tax on mobile phones. The tax was introduced last September which added 20 percent to the cost of mobile phones.

The ICT industry had been zero-rated for VAT since 2009, but now pays a 16% VAT on all imports.

Nokia's East Africa general manager, Bruce Howes confirmed that the new tax had caused a decline in sales for the manufacturer. He added that, as was widely expected, there had been a rise in smuggling of "grey phones" into the country as a result.

"We are working with the respective bodies to try to revert the decision on mobile device taxing because over 50 per cent of market is now on grey market."

Last year, when the tax was proposed, Nokia's EMEA Vice President, Jussi Hinkkanen warned that it would disproportionately hurt the poor who still lacked a mobile phone and would pay a tax that previous middle-class buyers had not been subjected to.

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Tags: nokia  Kenya 

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