Telcos paid GH¢3.2bn in taxes in 2019

• Posted on November 25, 2020November 25, 2020
• by Nana Kwesi Coomson
• Comment

Mobile network operators and infrastructure companies paid a total of GH¢3.2 billion in taxes and other remittances to the government in the year 2019.

This amount represents approximately 9.5% of Ghana’s annual total revenue basket and this  contribution is  largely  conservative  and  does  not  take  into  consideration  the  inputs  of  other players.  

The  mobile industry  tax  contribution in  previous  years includes GHC2.2 billion  in  2018 and GHC1.74 billion  in  2017.

Chief Executive Officer (CEO) of Ghana Chamber of Telecommunications, Dr Kenneth Ashigbey revealed that the figure is from a study indicating total tax contributions enabled by the mobile industry to support the socio-economic development of the country.

According to him, key highlights from the study showed the breakdown of the taxes as Communication Service Tax (CST) – GH¢414 million, Value Added Tax (VAT) – GH¢480 million; Corporate Income Tax (CIT) – GH¢832 million; Withholding Tax (WHT) – GH¢415 million, Import Duties – GH¢210 million, and National Fiscal Stabilisation Levy (NFSL) – GH¢71 million.

He explained that the Surcharge on International Incoming Traffic (SIIT), the quantum of six cents per every minute of call that comes from overseas into the country, raked in GH¢107 million in 2019.

Mobile network operators pay this amount to the industry regulator, the National Communications Authority (NCA).

Dr Ashigbey stated that Pay-As-You-Earn (PAYE) tax generated GH¢96 million.

Also, he said, the National Fiscal Stabilisation Levy (NFSL), introduced in 2013 to stabilise the economy over a period of 18 months, ending December 2015, raked in GH¢71 million in 2019 following continued renewal.  

He explained that other product taxes, Regulatory Fees and the Universal Service Fund, which mainly consist of  the  1%  annual  net  revenue,  required  to  be  paid  to  the  National  Communications Authority (NCA) on a quarterly basis, and an additional 1% of total revenue, required to be paid into an electronic fund set up by the government (GIFEC), was approximately  ¢101 million.

He noted that these  statutory  payments  are  based  on  the  top  line  of  the  businesses  and  are  payable whether a business makes profit or not.
Another key finding from the study was a 4.4% tax contribution of mobile financial services (MFS) to the total tax contribution, which in monetary terms is about GH¢19.3 million and largely attributed to withholding taxes (paid from commissions to merchants and MFS engagements with suppliers, partners, distributors, etc).

“The study also shows the mobile industry widely provides 6,700 direct jobs and over 1.8 million indirect jobs, contributing 2.93% to non-oil GDP,” he added.

He said telcos invested GH¢1.55 billion in capital expenditure within the fiscal year 2019.

Dr Ashigbey said the study shows quite a number of the service providers being unprofitable.  

He noted that while this positioning means that CIT is lacking, other remittances forms huge components of  fees,  levies and  charges  from  multiple  government agencies  that  work  with the industry.

He noted that the industry’s contribution in other remittances is approximately GH¢267 million.

According to him, the real effect in analysing this study on a mobile network operator generally means when the provider makes GH¢100, it pays back GH¢48 in the form of direct and indirect taxes, as well as other remittances as explained above.  

He noted that the remaining GH¢52 goes into investment   in   the   people,    capital expenditure, the   supply   chain   (procurement), marketing and general operations

“It is unlikely that any of these funds are left to be paid back as dividends to shareholders, which is the real objective of business everywhere in the world.  

“What  is  important  to  also  note  is  that  the  less  availability  of  funds  means investments  are  likely  to  suffer,  and  this  hurts  the  quality  of  the  network  and  service delivery for more government partnerships to deliver on our services to customers, as well as  meet government expectations  of  the  industry  because in  these  partnerships,  we  will find solutions to the greater challenges that affect the industry,” he added.

In summary, he said  that the mobile sector contributes to Ghana’s long-run economic and fiscal  stability,  both  through  its  own  contribution  to  the  economy  and  government revenues, and through the contribution of the associated ecosystem of industries.

Dr Ashigbey said mobile is the most cost-effective way of extending access to ICT, the internet in Ghana, as well as driving the digitisation agenda we pursue.
“It is, therefore, fundamental to helping our government achieve its objectives of expanding ICT infrastructure, meeting last mile goals, connecting the unconnected and positioning our economy as a smart and digital ready market towards further growth,” he added.

By Elvis DARKO, Accra