Matters arising in Ghana’s telecoms sector

The Ghanaian Parliament on July 9, 2013 passed into law the Communication Service Tax (Amendment) Bill 2013, under a certificate of urgency intended to enable government raise additional revenue to support its programmes.

The bill imposes a 6% per minute inter-connectivity charge to be paid by telecommunication service providers. The inter-connection tax applies to calls from one network to another within the country.

The act mandates the Minister for Finance to work in collaboration with the Minister for Communications to establish a monitoring mechanism to verify the actual revenue that accrues to service providers for the purpose of computing taxes due the government.

Also known as “Talk tax”, the Communications Service Tax was introduced by government in 2008 to increase revenue by exacting six percent on the value of services accessed by subscribers of mobile telephone networks.

The general purpose of the amended bill is to clarify the scope and coverage of the Tax and to include interconnection services within the tax base.

The Ghana Chamber of Telecommunications had warned passage of the bill will lead to a substantial increase in the cost of telecommunication services, if operators pass on the cost to consumers.

But Deputy Finance Minister, Ato Forson, says the tax would curb loss of revenue to the state.

He explained since 2011 the service providers have been charging the 6% inter-connectivity levy but they were not paying it to government.

According to him, the law now removes the confusion hitherto associated with Talk Tax and ensures that service providers do not rob the state of much needed revenue.

Parliament has also approved the imposition of a 20% tax rate on imported mobile phone handsets into Ghana. Government is hoping to realise about GH¢49 million from this tax.

Government argues that the move is to protect and help grow firms who assemble phones locally.

This, undoubtedly, has been welcomed by local mobile phone assembling companies.

Chief Executive of RLG Communications, Roland Agambire, says the new tax will help reduce the cost of locally manufactured handsets as well as offer an opportunity for foreign manufacturers to partner with the local phone assemblers.

But some industry watchers believe this would rather lead to smuggling of foreign phones into the country – defeating governments' plan to rake in more revenue for the state from the tax.

A leading mobile handset dealer, Job Osei-Tutu of Jobost Phones says the imposition of a 20 percent tax on mobile handsets will deprive consumers of access to quality phones.

“The consumer should be considered because the future looks better when consumers are satisfied in tasting the best of phones at good prices”, he stated.