Gov’t slashes talk tax by 4%

Mobile network subscribers will from the next six months pay 5% Communication Service Tax as the government reduces the talk tax by 4%.

Finance Minister, Ken Ofori-Atta announced the decision the presentation of the 2020 mid-year budget to Parliament in Accra, as he seeks approval to spend at least GHc 11. billion.

The government increased the communication service tax from 6% to 9% during the mid-term budget review in July last year, amid public uproar.

During the mid-year budget statement last year, the  Finance Minister, Ken Ofori-Atta,  in justifying the need for the increase said it was to create a viable technology ecosystem in the country.

“Government proposes to increase the tax to nine per cent to develop the foundation for the creation of a viable technology ecosystem in the country. This will comprise amongst others putting in systems to identify and combat cybercrime, protect users of information technology and combat money laundering and other financial crimes.

“The increase will not be earmarked, however, the sharing ratio will be adjusted in such a manner that the national youth employment programmes continue to receive the same proportions as they are currently receiving,” the minister said at the time.

But a year later amid COVID-19 outbreak which brought in its wake massive demand for internet data with telecommunication sector recording astronomical profits, many industry analysts experts expected a hike in taxes.

But the government chose not to milk huge profits as more and more businesses, educational institutions and the entertainment industry turn to the internet to keep their businesses alive.

In May, MTN reported that it had recorded a profit after tax of about 350 million cedis for the first three months in 2020, representing a 62% growth over the 2019 figure of 215 million cedis.

For the first three months of 2020, MTN’s total revenue which comprises income accruing from both core activities and other services amounted to 1.44 billion cedis.

This represents about 21% growth compared to the 1.19 billion cedis recorded the same period in 2019.

Of the total revenue, the company’s core activities like voice and data services, accrued 1.42 billion cedis or 99%.

The tax , which was introduced in 2008, is charged on the use of communication services in the country, including voice calls.