Proposed telco tax amendment bill bad for industry
The Chief Executive of the Ghana Chamber of Telecommunications, Kwaku Sekyi-Addo, says government’s proposal to increase taxes on some telecommunication services "does not look good" for the industry. Government has presented a paper seeking approval to amend the Communication Service Tax (CST) law and to impose additional taxes on some services including incoming international calls and email. But according to Mr. Sakyi-Addo the basis upon which government is seeking to amend the 2008 CST law is factually flawed. “The memorandum says that the CST or talk tax...was intended as an excise tax to raise additional revenue from communication service providers rendered to their customers and to each other...that is wrong”, Mr. Sakyi-Addo said. Speaking on Joy FM’s Super Morning Show Wednesday July 3, Mr. Sakyi-Addo said the law was meant to be a consumption tax not as a tax on interconnection, as suggested by government. He recalled that in 2008 when the issue of the CST came up in Parliament, Haruna Iddrisu, who was then the Minority Leader insisted the tax should be charged on the consumer and not the telcos because the telcos were over-burdened. He insisted that the CST's intent was not directed at telecommunication service providers, but essentially to tax subscribers.
“This amendment seeks to alter that and to have mobile phone operators pay an additional 6% in interconnection fees on top of the 6% that is paid by subscribers”, he said.
According to him, the bill also seeks to charge another 6% on international incoming calls, noting there was no clarity on that aspect of the amendment proposal. He said it is not clear whether that tax was going be paid by the subscriber or the mobile phone companies.
But he referred to a May 2013 ruling in which the Court ruled in favour of the telcos that Ghana Revenue Authority (GRA) was double taxing the telcos in charging an additional 6% on interconnection in addition to the 6% tax on consumers. In his view, the law was clear on the intent of the CST.
He stated that telecommunication has become an essential service to the Ghanaian like water, and wondered whether water would be treated the same.
He revealed there are plans to meet Parliamentarians on the matter as soon as possible.
Mr Sakyi-Addo cautioned government on the bill saying over-burdening them with taxes would have implications to service quality.