Kenya: CA and KRA Team Up to Enforce Mobile Device Tax Compliance

The Communications Authority of Kenya (CAK) has announced a new initiative aimed at boosting tax compliance in the mobile device market by collaborating with the Kenya Revenue Authority (KRA). This strategic move is expected to significantly improve oversight of mobile devices imported or assembled in Kenya, ensuring they meet the necessary tax regulations and enhancing overall transparency in the industry.

Starting from November 1, 2024, all mobile devices entering the Kenyan market, whether imported or assembled locally, will need to have their International Mobile Equipment Identity (IMEI) numbers registered with the KRA. The IMEI is a unique identifier for mobile devices, and this registration is intended to ensure that the devices comply with the country's tax laws. According to David Mugonyi, the Director General of the CAK, mobile network operators will play a critical role in enforcing this new requirement. Before a device can be connected to a mobile network, its IMEI number will need to be verified against a whitelist database provided by the CAK to confirm its tax compliance status. This means that only devices that have cleared tax obligations will be allowed to access mobile networks.

In addition to creating the whitelist, operators will also be responsible for identifying non-compliant devices, referred to as "gray list" devices, within a specific timeframe. Once these devices are flagged, they will be blacklisted, meaning they will no longer be able to connect to mobile networks. This move is expected to have a significant impact on reducing the number of illegally imported or untaxed mobile devices circulating in the Kenyan market.

For retailers and wholesalers, the new requirements are equally stringent. They must ensure that all mobile devices they sell or distribute are verified for tax compliance. Mugonyi emphasized that businesses involved in the mobile device supply chain will have access to tools provided by the CAK to verify the compliance status of devices before they are sold to consumers. This additional layer of verification is intended to close any loopholes and prevent non-compliant devices from reaching the market.

Local manufacturers of mobile devices are also required to integrate their products' IMEI numbers with the KRA portal to confirm that they meet tax obligations. This integration will ensure that all devices produced in Kenya are compliant before being made available for sale. The CAK has stressed that these measures are designed to improve the integrity of the mobile device market and promote a level playing field for all participants in the industry.

Mugonyi clarified that these regulations will only apply to devices imported or assembled after November 1, 2024. Devices already connected to the network as of October 31, 2024, will not be affected by the new rules, which means that current users of mobile devices will not experience any disruptions to their service.

The introduction of these measures by the CAK is part of a larger effort by the Kenyan government to improve regulation within the Information and Communication Technology (ICT) sector. The CAK, which serves as the government’s regulatory body for the ICT industry, oversees areas such as telecommunications, e-commerce, cybersecurity, broadcasting, and postal or courier services. By tightening control over mobile device imports and assemblies, the CAK aims to reduce tax evasion in the sector, increase government revenue, and ensure that all devices sold in Kenya are fully compliant with regulatory standards.

The collaboration between the CAK and the KRA highlights the growing emphasis on accountability and transparency in the management of the telecommunications industry in Kenya. By enforcing stricter compliance rules for mobile devices, the CAK hopes to not only streamline the industry but also create a more equitable business environment for all stakeholders involved. These efforts are seen as crucial steps toward positioning Kenya as a leading player in the digital economy, with robust systems in place to support sustainable growth and development in the ICT sector.

Ultimately, this initiative is expected to have a wide-reaching impact on the mobile device market in Kenya, encouraging more responsible business practices among importers, retailers, wholesalers, and manufacturers. It is also anticipated that the new regulations will lead to a reduction in the number of counterfeit or illegally imported mobile devices, which have long been a challenge for the industry.