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Breaking NewsBusiness

Vodafone begins charging customers for 9% Communication Service Tax

Latifa Carlos
Last updated: September 18, 2019 10:58 am
Latifa Carlos
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Vodafone Ghana says it started charging its customers the revised Communication Service Tax (CST) from this month. 

In a notice, the telecoms operator noted that “this is to inform you that increment in the Communication Service Tax (CST) as announced in the Mid -Year Budget Review took effect from August 19.” 

Vodafone added that the review of the tax from 6 per cent to 9 per cent would reflect in customers invoice going forward. 

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The notice adds, “in the light of this, your September bill will also include a pro-rated CST accrued in August 2019.”   

Background

Finance Minister Ken Ofori-Atta in the Supplementary Budget announced an increase in the Communication Service Tax from 6 to   9 per cent. 

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. 

The tax is levied on charges payable by consumers for the use of communication services. In 2018 the tax brought in a total of GH¢420 million, representing a 27.7 per cent increase from the estimated GH¢304 million accrued in 2017. 

The amount generated from the levy was 4.56 per cent more than the projected GH¢401.8 million in the 2018 mid-year budget.

Telecoms Chamber on levy

 There are currently concerns about why some telecom firms are delaying in fully implementing the levies.

The Chief Executive Officer of the Telecoms Chamber, Ken Ashigbey has told JoyBusiness that the telcos are fully committed to abiding by the laws and the Ghana Revenue  Authority’s directive, however, delays in fully calibrating their systems have been a major challenge.  

Mr Ashigbey said they have engaged the Ghana Revenue Authority on reviewing the timelines for implementing these levies, especially for the pre-paid customers.

How would the application of this levy affect consumers?

There has not been any official communication from any of the telcos or the Telecoms Chamber, however, based on some private discussion with some of the players, this is how some of the telcos may apply the levy; so for instance, if you buy 1 cedi credit, you will get a message that your CST is 0.09 pesewas and actual credit is, say 0.91pesewas.

Another scenario on the expected impact on consumers  

These are just projections; this is because every operator has its open pricing mechanism, “complexity of pricing & competition”.

But if you take a package of 100 of data, voice and SMS with all margins and cost added and then you work the tax;

CST was GH¢6 then and it is GH¢9 now

Levy was GH¢5 then and it is GH¢5 now

Subtotal GH¢11 then and it is GH¢14 now

Vat figure is GH¢¢111 then and it is GH¢114 now.

Apply VAT of 12.5% get GH¢124.87 and it is GH¢128.25 now.

Source:Myjoyonline

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