Mobile phone users in Ghana will not directly be charged the newly introduced 9% communication service tax after all. Instead, telecom companies in the country will now adjust their existing tariffs to reflect the new tax. This is a big win for Ghana’s government which strongly opposed upfront deduction of the Communication Service Tax (CST) by the companies early October.
Ghana Chamber of Telecommunications says its members will now comply with the government’s directive to stop the upfront.
The operators refused to absorb the 9 percent CST, however, as was done in the past when the rate was at 6 percent. After a meeting with government on 30 October, the Chamber said an agreement was reached to “stop upfront deduction of CST but rather apply the tax through a tariff adjustment”.
Early October, 2019, Ghana ’s Communications Ministry ordered Mobile Network Operators (MNOs) to stop passing on the 9% Communication Service Tax (CST) to subscribers.
In a letter addressed to the National Communications Authority (NCA), the Communications Ministry stated that the CST should be treated the same way VAT, NHIL, GETFUND levy and all other taxes and levies imposed on entities doing business in Ghana are treated.
A Look At How The Extra Communication Tax Story Started
- Finance Minister Ken Ofori-Atta in the Supplementary Budget announced an increase in the CST from 6% to 9%.
- According to him, the increase was to help develop the foundation for a viable technology ecosystem in the county.
- This will comprise putting in systems to identify and combat cybercrime, protect users of information technology and combat money laundering and other financial crimes.
- Mr Ofori-Atta stated that sharing ratio would be done in a way that the National Youth Employment programs would continue to receive the same portions as the current cycle. In 2018 the tax was first introduced at an Ad Valorem Rate of 6 per cent.
- MTN, AirtelTigo, Vodafone and Glo, implementing the new tax, started charging their customers the full amount of the revised Communication Service Tax (CST) since October 1, 2019.
- The CST, which has been increased from 6% to 9%, was applied to any recharge purchase by subscribers.
- For every GH¢1 of recharge purchased, a 9% CST fee is charged the subscriber leaving ¢0.93 for the purchase of products and services.
- According to the Ministry of Communications statement, which has been copied to all the telcos, this is wrong and was then banned.
The Newly Adjusted Tariffs Will Take Effect From November 26, 2019
According to Ghana Chamber of Telecommunications, the deduction is in line with how the Ghana Revenue Authority calculates and charges the CST. The price increase will take effect by 26 November as the industry requires a number of weeks to complete the reconfiguration of its systems.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world