A taskforce established by the Ethiopian Telecommunications Corporation (ETC) proposed to the government to lift the cumbersome tax levied on mobile phones.
Even though ETC is expanding its internet and mobile network services it is unable to attract adequate number of customers. The corporation’s mobile network will soon be able to accommodate 15 million customers. However, it now has only five million mobile subscribers. Ethiopia’s mobile penetration rate stands at five percent while sub-Saharan African penetration rate is 39 percent.
The task force submitted the proposal to the Prime Minister’s Office on March 6. The study points out that low per capita income, cost of ownership, and customs duty were the reasons for the low ICT penetration rate.
The task force said that the 38 percent duty levied on the mobile phone was “outrageous” by any standards. Countries like Kenya and Egypt exempt mobile phones from tax payments. The task force suggests that it is only VAT that should be collected from the importation of mobile phones. Since computers are expensive, people are now using mobile phones to access the internet. “So mobile phones are no more a luxury,” the experts said.
According to the study in the past five years ECT added 3.89 million new mobile subscribers. However, the number of mobile phones imported legally during the stated period was only 88,000. The researchers believe that by avoiding the cumbersome customs duty ETC can collect a huge sum of money from VAT payments and airtime fees. They said that 98 percent of the mobile phones in use were contraband.