Gov’t orders telcos to stop passing on 9% service tax to subscribers

The Communications Ministry has 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), and published in full below, 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.

“At a series of meetings held between the Ministry of Communications, Mobile Network Organisations (MNOs) and the NCA on 7^th and 8^th October, 2019, we were informed that prior to 4^th September 2019, MNOs had not been passing on CST to subscribers but had decided to take advantage of the 3% increase to pass on the entire tax to subscribers. This has effectively increased their profit margin at the expense of subscribers,” the letter explained.

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MTN, AirtelTigo, Vodafone and Glo have been 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%, has been 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.

Finance Minister Ken Ofori-Atta in the Supplementary Budget announced an increase in the CST from 6% to 9%. 

According to the Finance Minister, 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 maintains 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. 

Read the full letter directing MNOs to stop charging the 3% on subscribers below.

Source: Myjoyonline