Telecom Chamber to petition government on tax incentives

By: Fred Yaw Sarpong- Daily Express

Ghana Chamber of Telecommunications (GCT), an association of telecommunication companies in Ghana is to petition the government for possible tax incentives for the members of the chamber.

The Chamber will first have discussions with it members and know the areas they would prefer the tax incentives, and then approach the government with their concerns. 

The operators, led by the Chamber presented a study on data statistics to the public concerning taxes the operators have been paying to the state.

The operators who formed the members of the Chamber are the Mobile Telecommunication Network (MTN), Vodafone, Tigo, Expresso and Airtel. However, ATC Tower Ghana and HTG Managed Services Limited (Helios) have joined the chamber as members.

The Chief Executive Officer (CEO) of the Chamber, Mr. Kweku Sakyi-Addo told Daily Express that this is the time the public have to appreciate the tax contribution of it companies.

“Our focus is to share the detail of the statistics to enable the general public and institutions to be aligned with the contribution of the mobile network operators, make intense of their own tax obligations as well as the obligations they make on behalf of others (suppliers, vendors, employees and so on),” he stated.

“This is transparency on the part of the network operators and that is the fundamental purpose of this study,’ Mr. Sakyi-Addo added.

A study which was conducted by the PriceWaterhouseCooper (PwC) on behalf of the operators revealed that, in 2014, the total taxes borne by the operators (including profit taxes such as Corporate Income Tax, National Fiscal Stabilisation Levy, people taxes, product taxes and property taxes) increased by 22% in cedi terms.

“The taxes collected were about 2.5% and 3.2% times the amount of taxes borne in 2014 and 2013 respectively. The members of the Chamber contributed far more in other taxes paid to the national revenues than is recognised through profit taxes alone,” the study shows.

The Chamber said total taxes borne and total taxes collected resulted in a total tax of GHc1.04 billion and GHc1.05 billion in 2013 and 2014 respectively from the telecom sector. “This contribution forms 6.9% and 5.4% of the Government of Ghana’s tax revenue (Ministry of Finance, 20141 and 20152 budget statements) for 2013 and 2014 respectively.”

According to the study, product taxes and regulatory fees paid to regulatory agencies together constitute the largest type of tax payment. The product taxes mainly comprise of the statutory 1% net revenue contribution to National Communications Authority (NCA) and Ghana Investment Fund for Electronic Communications (GIFEC). The product taxes and regulatory fees exceeded the usual visible profit taxes such as corporate income tax.

The study continues to show an increase in product taxes collected such as Communication Services Tax (CST) and Value-Added Tax (VAT). The CST is an industry specific tax which was introduced in 2008 to raise revenue from the communications services rendered by telecom operators to their customers. The CST paid by members increased by over 57% from 2012 to 2014.

“The increase relates to the growth of the telecoms sector over the period as well as changes in underlying laws governing the collection of taxes on voice and data service,” Daily Express gathered.

Study noted that the members of GCT have been engaged in various Corporate Social Responsibility activities (CSR) mainly in the education sector, health sector and economic development areas as part of their contributions to the society at large, adding that the CSR contributions represented 5.7% to 1.2% of the average taxes collected for government between 2011 and 2014.

Daily Express gathered that overall, there was a decline in capital expenditure by an average of 43% between 2011 and 2013.

The decline is said to be attributed to changes in legislation that required telecommunications operators to divest their tower portfolios and the investment life cycles of the industry that requires high level of investment in capital in early years.

However, there was an increase in operating expenditures by 63% between 2012 and 2013. “The telecommunication operators are expected to incur additional costs of renting towers,” the GCT noted.

Meanwhile, the study revealed that the total tax contribution per user measures how much each end user pays per cedi of revenue earned by the operators. In 2013, for every GHc8.35 of revenue generated by a telecommunication entity, the customer paid GHc2.8 in taxes – both borne and collected.