Gov’t hints of sanctions against telcos defying CST directive

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The Communications Ministry has said Mobile Network Operators (MNOs) defying recent directives on the Communications Services Tax (CST) will be punished.

Communications Minister, Ursula Owusu-Ekuful, on Friday, issued a statement directing telecommunication companies in Ghana to stop the upfront deduction of the 9% Communications Service Tax (CST).

The statement on Friday also said it was wrong for the MNOs to pass on the entire 9% CST on to customers and faulted the MNOs for making an astronomical profit by charging subscribers the entire 9% tax.

Despite the directive, MNOs are still deducting the tax upfront in breach of the order by the Ministry.

Critics of the directive say the Ministry was unlawfully interfering in the operation of the sector.

But speaking at the news conference on Monday, the Minister said the regulator, the National Communications Authority (NCA) will have a conversation with the telcos charging the tax upfront for the requisite sanctions to be applied.

“It is an irregular way of deducting taxes because it flies against industry practice and so they should reconfigure their system to treat it the same way they treat other taxes and levies that they are required to collect and pass on. I don’t see how this can be an illegal directive,” she said.

Photo: The Minister, Ursula Owusu-Ekuful

She warned that if the telcos want to continue doing business in Ghana, they will have to respect its laws.

“All of them are multi-internationals…and they know better than to flout the laws of the jurisdictions that they operate,” the communications Minister said.

She said the licences of MNOs defying the directive could be revoked.

The CST, which has been increased from 6% to 9%, has been applied to any recharge purchase by subscribers.

For every GH¢1 of recharge purchased, a 9% CST fee is charged the subscriber leaving ¢0.93 for the purchase of products and services.

Finance Minister Ken Ofori-Atta in the Supplementary Budget announced an increase in the CST from 6% to 9%.

Justification for tax 

According to the Finance Minister, the increase was to help develop the foundation for a viable technology ecosystem in the county. 

This will comprise putting in systems to identify and combat cybercrime, protect users of information technology and combat money laundering and other financial crimes.

Mr Ofori-Atta maintains that sharing ratio would be done in a way that the National Youth Employment programmes would continue to receive the same portions as the current cycle. In 2018 the tax was first introduced at an Ad Valorem Rate of 6 per cent. 

Source: Ghana | Myjoyonline.com | GN