AGENT BANKING AND MOBILE MONEY AGENTS TO PAY 10% TAX STARTING 1ST JULY

The Ministry of Finance announced that Mobile Money & agent banking agents will be paying a 10 % with holding tax from their commission.

This came after the Ministry proposed and amended the income tax bill 2023 to extend application of tax and make the withholding tax on commissions a final tax and increase the rate from 10% to 15 %.

Earlier today the Ministry of Finance that this bill will be effective 1^st July. Every single Mobile Money agent or agent banking personnel will be paying 10% withholding tax from the commissions.

This means that a telecommunications service provider who makes payment of commission for airtime distribution or provision of mobile money services shall withhold tax on the gross payment and the financial institution that makes a payment of a commission for agency banking or to an agent banker to withhold tax on the gross.

This tax is going to prompt the promotion of digital or call it liquid money transfer because obviously this will eventually be subjected to the customer trying to make any cash transactions.

Analysts however reveal that this could pave way for agencies dealing in crypto currency to grow because once the customer discovers a way to get cash without having to pay such heavy taxes, they will adopt to it.

They further encourage entrepreneurs to develop the digital aspects of their businesses so that they can serve their customers better because with these taxes, most clients will prefer to transfer money other than withdrawing because of the soon coming withdraw charges.