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28.11.2019 Business & Finance

Telcos Paid GH¢2.2 Billion Taxes To Gov’t In 2018 — Telcom Chamber

By Eric Nana Yaw Kwafo
Telcos Paid GH¢2.2 Billion Taxes To Gov’t In 2018 — Telcom Chamber

An extensive study conducted by the Ghana Chamber of Telecommunications (GCT) has revealed that its associated telecommunication operators paid GH¢2.2 billion in taxes to the government in 2018.

This follows comments by the sector minister Ursula Owusu that the telcos are not paying the actual taxes to the state.

At a media engagement in Accra on Wednesday, Mr. Kenneth Ashigbey who is the Chief Executive Officer of the Chamber explained that the purpose of the study was to measure the size of the contribution that its members made to the government of Ghana.

He noted that the Chamber took data on tax payments of all of its members for the financial/tax year and adopted the Total Tax Contribution (TTC) methodology for the study.

At the end of the survey, Mr Ashigbey indicated that total taxes borne, total taxes collected and other payment to government resulted in total payment contributions of GH¢2.2 billion by the members of the GCT.

He added that Value Added Tax (VAT) stood out as one of the top tax lines of industry, representing approximately 19% of the Total Tax Contribution running to GH¢412million.

Mr Ashigbey stressed that Communications Service Tax (CST) also stood as one of the top tax lines in the study, representing 19% approximately of the TTC running to GH¢420 million.

According to him, Corporate Income Tax relating to taxes borne by the members of the chamber represented approximately 16% of the TTC in monetary terms of GH¢342 million.

Other product taxes such as regulatory fees and the universal service fund which mainly consist of the 1% annual net revenue, he indicated required to be paid to the Nations Communications Authority (NCA) on a quarterly basis and an additional 1% of annual net revenue required to be paid into an electronic fund set up by the government (GIFEC) was approximately GH¢114 million.

Another noteworthy finding from the study Mr Ken Ashigbey noted was a 0.07% tax contribution of mobile financial services (MFS) to the TTC which in monetary terms is about GH¢15.1 million and largely attributed to withholding taxes (WHT) paid from commissions to merchants and MFS engagements with suppliers, distributors, etc.

In relation to the approximately 6,500 employees employed by members of the Ghana Chamber of Telecommunications to render services of Pay As You Earn (PAYE) on their behalf, he said government ended up receiving approximately GH¢64 million.

Meanwhile, the Ministry of Finance's 2019 budget statement for 2018 stated that the GH¢2.2 billion government earned as Total Tax Contributions formed over 6% of the government of Ghana’s tax revenue

This contribution, although largely conservative and does not take into consideration the inputs of other players in the study, the chamber of telecommunications stressed that it demonstrates the importance of the mobile industry to the government’s tax revenue and national GDP growth.

Mr. Kenneth Ashigbey believes that whereas the total taxes collected and total taxes born shows growth in mobile industry tax contribution compared to previous years, the change in consumer behavior such as switching to less expensive data services and the likes, government will need to work hand in hand with the telecommunications sector so that the promise of a digitally inclusive and connected Ghana will be fully realised.