Govt VAT on internet raises rates
Internet service providers have jacked up their tariffs effective July 2013, apparently contradicting government’s argument on the services.
Internet service providers, TNM, Airtel Malawi and Broadband, announced new charges on their Internet services due to the reintroduction of value added tax (VAT).
Minister of Finance Ken Lipenga, in the 2013/14 national budget, introduced a 16.5 percent VAT on Internet services, arguing it would allow Internet service providers to claim input VAT and this will in turn reduce costs associated with the provision of internet services thereby making Internet services relatively cheaper and accessible to users.
But TNM and Airtel Malawi in press statements advised their customers that Internet rates will be adjusted upwards following the reintroduction of VAT by government.
Minister of Information and Civic Education Moses Kunkuyu, in an interview on Sunday, argued that the increase in tariffs would not affect access to information and communications technologies (ICT).
“Access to ICT is different from tariffs. As government, we are ensuring an increase in access to ICT through enhancement of competition,” said Kunkuyu, but pushed the issue to the Ministry of Finance.
Ministry of Finance spokesperson Nations Msowoya on Sunday asked for more time to consult on the matter before responding.
TNM increased its three kilobyte (kb) by 25 percent from K0.04 to K0.05 and one gigabyte by 16.5 percent from K13.65 to K15.90 effective July 15, while Airtel Malawi raised its tariffs by an average 16.72 percent.
Government is implementing the Economic Recovery Plan (ERP) under which access to ICT services is priority.
Under the ERP, government aims to improve usage and adoption of electronic and online services, availability of service, geographical coverage and usage of modern broadcasting technology.
The ERP further encourages the reduction of communication costs by improving the regulatory framework for the sector, liberalising the mobile telecommunications sector to encourage new international entrants and ensuring liberal regulatory environment regarding international ICT gateway licences.
