Nokia blames tax evasion for rise in counterfeits

Nokia is blaming unscrupulous businesspeople who evade Value Added Tax for the rise in counterfeit handsets in East Africa.

Counterfeit Nokia handsets from Asia have entered the market without VAT payment and without important Nokia features like the Kiswahili language interface, said Gerard Brandjes, Nokia general manager for East and Southern Africa.

Nokia has intensified lobbying efforts in Uganda, Kenya and Tanzania to have VAT scraped in order to increase the uptake of mobile phones with the resulting lower prices. Kenya charges 16 percent VAT, Tanzania 18 percent and Uganda 20 percent.

"Sixteen months ago, Ghana made a very bold decision and they removed the VAT element associated with mobile phones as well as the customs duty," said Brandjes. "The country has reaped benefits from increased penetration."

At the same time, Nokia launched the Nokia 2330 classic and Nokia 2720 for the low-end market. The phones are 3G enabled and work with Nokia's range of emerging market services such as Nokia Life Tools and Ovi Mail.

"The power of the Internet is undeniable," said Alex Lambeek, vice president at Nokia. "We have seen mobile technologies catalyze the growth of the informal sector across the world, empowering local entrepreneurs and having an immediate and lasting impact on people's lives."