Telcos reduce Communications Service Tax

Mobile network operators have effected the four per cent reduction in the Communications Service Tax (CST) for customers, as directed by the government.

The reduction, which took effect from yesterday, represents the five per cent of the CST charge based on products and services, in accordance with the passage of the Communications Service Tax (Amendment) Act, 2020 (Act 1025).

Confirming the implementation of this latest tariff, the Chief Executive Officer of the Ghana Telecommunications Chamber, Mr Ken Ashigbey, told the Daily Graphic that it was successfully done after the smooth reconfiguration of service providers’ systems to accommodate the commercial and technical requirements.

The latest talk-time and data tariffs, to last for the next six months, are part of the government’s intervention to mitigate the impact of the coronavirus disease (COVID-19) pandemic in Ghana.

Reduction

The Minister of Finance, Mr Ken Ofori-Atta, announced the proposed reduction when he presented the mid-year budget review in Parliament on July 23, 2020.

“In the short term, we will reduce the CST from nine to five per cent to reduce the cost of communication services for the consumer as more and more people work remotely and utilise online services.

“We will count on the telcos to match this reduction in the CST by reducing their tariffs. This is important for our youth, entrepreneurs and the burgeoning FINTEC industry,” Mr Ofori-Atta had indicated.

Notification

Last Monday, telecommunications operators sent SMS messages to inform their customers about the reduction.

“Dear valued customer, in line with the government’s reduction of the Communications Service Tax(CST) from nine to five per cent, effective September 15, your talk time and data purchases will reflect the tax reduction,” the notification message read.

Smooth implementation

Mr Ashigbey said the reduction meant consumers of all the network operators would enjoy more for the same price.

He said consumers, particularly those using prepaid services, would enjoy the reduction from what they purchased from yesterday and enjoy the four per cent on what they had bought.

“For postpaid customers, their bill at the end of the month will reflect CST of five per cent for all communications services that they consumed from September 15.

“For prepaid customers — using a GH¢10 scratch card as an illustration — for some networks when you load your GH¢10 scratch card, apart from the GH¢10 airtime that you will get, they will give you four per cent CST reduction as extra airtime that you can use to bundle your voice, sms or data.

“For other networks — with the GH¢10 scratch card — in the previous regime of nine per cent CST, the consumer only got GH¢7.78 after the taxes had been taken off, but now with the current CST, the consumer will have GH¢8.01 to be used for voice, sms & data.

“So with the new tariff taking effect, consumers will either get more value of communications services for the same amount you spent previously or, if you want to maintain the same volume of communications services, you will pay less,” Mr Ashigbey explained.

He indicated that unlike previously when the implementation of an increment was wrought with some technical challenges, the process of reduction had been smoothly configured, describing it as “a testament to the effective dialogue and stakeholder engagements, led by the Finance Ministry, as well as our supervising ministry and agencies”.

The CST

The CST is a levy for the use of communications services that are provided by electronic communications service providers.

It was introduced in 2008 and charged on the use of communication services in the country, including voice calls, under Section 1 of the Communications Service Tax Act, 2008, (Act 754) and CST(Amendment) Act, 2013 (Act 864).

The Domestic Tax Revenue Division of the Ghana Revenue Authority (GRA) is responsible for its collection and pays what it collects each month into the Consolidated Fund.

In 2019, the government increased the tax from six to nine per cent, with the aim of creating a viable technology ecosystem in the country.

In implementing the increment, the service providers began deducting the tax upfront, but that attracted unpleasant reaction from consumers, and with the intervention of the Ministry of Communications, the telcos subsequently stopped the upfront deduction of the tax.