Telcos hike communications service tax to 9%

Mobile phone users in Ghana yesterday started paying 3% more on Communication Service Tax.

Nigerians are fighting against the same Bill seeking to impose and collect communication services tax (CST or levy) on charges payable by consumers of electronic communication services in Nigeria (excluding private electronic communication services) at the rate of 9%.

But in Ghane, the tax which was hitherto pegged at 6%, was increased to 9% after, Ken Ofori-Atta, finance minister announced that the CST will be higher.

He announced this decision in Parliament in July during the presentation of the 2019 mid-year budget review.

Mobile users have received text messages from their service providers about the increase. The telcos in their messages said the increase will be “applied to every recharge.”

“Dear customer, with the increase in Communications Service Tax – CST to 9%, effective 1st October 2019, CST of 9% will be applied to every recharge. Thank you,” a text to a Vodafone Ghana user read.

A statement issued by the Ghana Chamber of Telecommunications said that the increase means that “for every GH¢1 of recharge purchased, a 9% CST fee will be charged leaving GhS0.91 for purchase of products and services”.

If you purchase GHC2 airtime you will have GHC1.82.

Airtime of GHC5 will leave the customer with GHC4.55

When a client buys GHC10 the customer will have GHC9.1 for purchase of products and services.

GHC20 airtime will leave you with GHC18.2 worth of airtime

When you buy a GHC50 worth of airtime you will get GHC45.5 for products and services.

In Nigeria, the federal government has mulled Communication Services Tax Bill (the Bill).

Electronic communication services subject to the levy include: voice calls, SMS, MMS, data usage (both from Telecommunication Services Providers and Internet Service Providers), Pay per View TV Stations etc.

The tax is to be paid together with the electronic communication service charge payable to the service provider by the user of the service.

The tax is payable whether or not the person making the supply is permitted or authorized to provide electronic communications services.

The Federal Inland Revenue Service (FIRS) is responsible for collecting the tax from service providers and remitting it into the Federation Account.

All service providers are expected to file monthly returns not later than the last working day of the month immediately after the month to which the tax returns and payment relate.

Penalty for failure to file returns on or before the due date is N50,000 and an additional N10,000 for each day the returns are not submitted.

Failure to pay the tax by the due date attracts monthly interest on the tax due at a rate of 150% of the average of prevailing commercial banks’ lending rates as published by the Central Bank of Nigeria and for this purpose, part of one month shall be deemed to be one month. Where interest payable is not paid within one month after the due date, interest shall be paid on the unpaid interest at the same rate and manner on the unpaid tax.Where tax, penalty and/ or interest is due, FIRS may apply to the Court for an order that compels an individual or business who holds money for or on account of the service provider to pay to the FIRS that money or so much of it as is sufficient to discharge amount due. Where this situation continues, FIRS may apply to the Court for an order to distrain the assets, goods, etc. of the service provider.

In the case of liquidation or bankruptcy, the tax, due shall take precedence over other obligations.

For the purpose of verification of taxes due to government, an agent would be appointed to establish both electronic and physical monitoring mechanisms to monitor, analyse, verify and save all necessary data and information.

A service provider who refuses to provide access to its relevant network for government or its appointed agent commits an offence and is liable to a penalty of 5% of annual gross revenue of the last audited financial statements and if situation persists after 90 days, National Communications Commission (NCC) may revoke the operating license of that service provider.