Consumers of telecommunications services will have to brace themselves up to pay for more following the upward adjustment of the Communication Service Tax (CST) from 6% to nine 9%
The increment represents 50% of the CST.
Finance Minister, Ken Ofori-Atta made the announcement when he moved a motion on the floor of Parliament on Monday, July 29, 2019, for the approval of the Mid-Year Review of the Budget Statement and Economic Policy of the Government of Ghana and Supplementary Estimate for the 2019 Financial Year.
He told the House that the increment will help to develop the foundation for the creation of a viable technology ecosystem in the country which inter alia, will comprise putting in systems to identify and combat cybercrime, protect users of information technology and combat money laundering and other financial times.
“The increase will not be earmarked, however, the sharing ratio will be adjusted in such a manner that the national youth employment programs continue to receive the same proportions as they are currently receiving”, he noted.
The Communication Service Tax (CST) was introduced in 2008 as a tax to raise additional revenue from communications services rendered by mobile operators to their customers.
In the process of implementing the CST Act, the telecommunications companies (“Telcos”) raised administrative and legal objections on the Ghana Revenue Authority’s (GRA) resolve to collect CST from the Telcos on local interconnection services culminating in the landmark judgment handed down by the Commercial Division of the Accra Fast Track High Court in favour of the Telcos (i.e Scancom Limited, now MTN, Ghana Telecom Co Ltd, now Vodafone, and Milicom Ghana Limited, also known as Tigo).
The judgement effectively barred GRA and Government from collecting CST on interconnect services.
The main objective of the CSTB is to clarify the scope and coverage of the CST and to explicitly include interconnect services within the tax base. The CSTB is also meant to end the controversy over whether or not CST is applicable on interconnect services provided by one telecommunication company to another.