Ethiopia Set to Tax Social Media Messaging Apps: A Look at the Implications
Ethiopia’s state-owned telecommunications company, Ethio Telecom, is nearing the implementation of a new policy: taxing popular social media applications used for voice calls and messaging. This move, years in the making, aims to recoup revenue lost to over-the-top (OTT) services like WhatsApp, Viber, Telegram, and Facebook Messenger, which offer cheaper communication alternatives. The implications of this decision could significantly impact how Ethiopians communicate and interact with each other, adding to the ongoing debate about digital access and affordability in the African context.
The Technical and Financial Realities Behind the Tax
Ethio Telecom’s decision stems from a substantial loss of revenue attributed to the widespread use of free and low-cost communication services offered by social media platforms. The company has invested heavily in acquiring the necessary technological infrastructure to implement this tax. The procurement of the required software, which includes Policy Charging Rule Function (PCRF) and Traffic Detection Function (TDF) tools, cost the telecom provider USD 10 million. This software is designed to either block access to the taxed platforms or levy charges for their usage, enabling Ethio Telecom to regulate and profit from these services. The delay in implementing the tax was primarily due to the challenges in securing the necessary foreign currency for the software acquisition, highlighting the economic complexities faced by businesses in the nation. The goal is to recover billions of Birr (Ethiopian currency) in lost revenue by taxing apps, according to Wazema Radio.
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