Somaliland’s government has expanded its sales tax policy to include mobile money transactions, drawing mixed reactions from citizens and economic analysts.
Previously limited to select businesses, the new 5% sales tax now applies to mobile phone airtime top-ups, internet data packages, and home and office internet services. The government rolled out the policy on Monday after President Abdirahman Mohamed Abdullahi Irro’s administration approved a broader taxation framework to address declining customs revenues.
For years, Somaliland has depended on customs duties collected from imported and exported goods. However, that revenue stream has become increasingly uncertain due to regional instability—conflicts in eastern Somaliland, disruptions in the Red Sea, and global trade fluctuations have made customs revenue unreliable.
Minister of the Presidency Khadar Hussein Abdi, a key figure in the tax policy’s implementation, defended the expansion, framing it as an essential step toward economic self-sufficiency.
“We cannot afford to depend on external trade alone. Strengthening domestic revenue collection ensures we can provide essential services and fund critical infrastructure projects,” Abdi said.
The tax will be deducted at the point of transaction, with telecommunications companies facilitating collection through an automated system linked to the government’s General Sales Tax (GST) framework.
The Ministry of Finance stated that implementation is proceeding as planned, emphasizing collaboration with telecom providers.
“Technical integration is complete, and power companies have already enforced the tax. Telecom firms are now fully aligned with the Ministry of Finance’s tax collection system,” the ministry said in a statement.
The policy has sparked debate over its long-term impact on Somaliland’s economy. While officials tout it as a necessary step toward fiscal sustainability, critics argue it disproportionately affects low-income citizens.
Economic analyst Yusuf Mohamed Hussein acknowledged the government’s rationale but warned of potential drawbacks.
“This tax will generate significant revenue, enabling Somaliland to invest in development projects and social services. However, for low-income earners, taxing mobile services, electricity, and internet access could make everyday expenses more burdensome,” Hussein said.
Some Hargeisa residents expressed frustration over the policy’s timing.
“This tax is an added burden on those already struggling with high living costs,” said Mohamed Hussein Warsame. “Internet and mobile services are essential—this move will only make life harder for ordinary citizens.”
Others saw the tax as a necessary measure for Somaliland’s long-term growth.
“This tax will help the government reinvest in public services and build infrastructure,” said Layla Ahmed Ismail. “If managed effectively, it could benefit all of us in the future.”
Despite criticism, the government insists that expanding taxation is critical for Somaliland’s future economic stability. Officials argue that strengthening domestic revenue is the only sustainable way to finance infrastructure and public services.
Despite criticism, the government insists that expanding taxation is critical for Somaliland’s future economic stability. Officials argue that strengthening domestic revenue is the only sustainable way to finance infrastructure and public services.
