Telcos consider options after Talk-Tax amendment

The Ghana Chamber of Telecommunications has expressed surprise at the passage of the amended Communication Service Tax (CST) bill, and says it is reviewing the law to assess its impact on the telecom industry.

The CST Amendment Bill, which was passed by Parliament last Tuesday despite opposition from the Chamber, will avert the loss of about GH¢45million that would have been occasioned by the controversy over interconnectivity charges, Government officials said.

The amended bill clarified the interconnectivity tax on telephone calls as an excise, not VAT, and will make it compulsory for the service providers to resume payment of the tax.

“The amendment will hurt both subscribers and Government,” said Kwaku Sakyi-Addo, Chief Executive Officer of the Telecoms Chamber. “Our understanding was that the bill was withdrawn for further consultations, but there has not been any consultation with us.”

The Communication Service Tax, introduced in 2008, was fixed at an ad valorem rate of 6% on a one-minute call charge. In addition, an interconnectivity charge was added to raise revenue for services rendered by mobile operators to each other when they are dealing with calls of customers from other networks.

However, service providers, who initially remitted the charges to government, went to court to challenge the aspect of the law relating to interconnectivity charges. After winning the ruling over the matter, the companies stopped paying the tax pending the outcome of an appeal by Government.

The amended bill seeks to clarify aspects of the original Act thought to have ambiguities regarding interconnectivity-related levies, said Finance Minister Seth Terkper.

It, however, excluded a second controversial clause, which proposed an additional 6% interconnection fee on incoming international calls and emails.

Even as telecoms companies consider their options, Deputy Finance Minister Cassiel Ato Forson has said there should not be any justification for call rates to go up on condition of the amendment.