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Ghana begins 9% hike in communication tax as Bill passes 1st reading in Nigeria

Official hike from 6% to 9% in Ghanaian Communication Service Tax (CST) levied on all telecoms subscribers’ took effect from October first this year.

The increase stemmed from the mid-year review and supplementary budget presented to Parliament by Mr Ken Ofori-Atta, the Minister of Finance.

Business Hilights Ghana Bureau chief reports that a statement issued by the Chamber of Telecommunications, said the CST, has been increased from six per cent to nine per cent and would be applied to any recharge purchased by customers.

It said with every GHC 1.00 worth of recharge or airtime purchased, a nine per cent CST fee would be charged leaving GHC 0.93 per cent for purchase of products and services.

Whereas the increase will affect the cost of telecommunication services rendered to customers by the companies including Vodafone Ghana, AirtelTigo, and MTN Ghana, earlier in the week, Borno State Senator, Ali Ndume introduced at Senate plenary, a new bill seeking to push up Nigeria’s Communication tax to the same 9% as in Ghana.

Part of the meaning of the new development according to industry experts is users of communication service providers in the country may have to pay nine percent service tax if the Communication Tax Bill currently before the Senate is passed by the two chambers of the National Assembly and assented to by President Muhammadu Buhari.

The Bill entitled ‘Communication Tax Bill, 2019 (SB.12)’ sponsored by Chairman of the Senate Committee on Army, Senator Ali Ndume, passed the first reading at plenary Wednesday last week.

The bill will now go for second reading before being referred to the appropriate committee for further legislative action including public hearing.

There are speculations that the proposed introduction of the tax, is meant to replace the 2.2% increase in the Value Added Tax being planned by the Federal government as announced by Finance and National Planning Minister, Zainab Ahmad, recently.

The Communication Service Tax Bill provides that the rate of the tax is 9% of the charge for the use of the communication service.

The Bill reads in part saying, “There shall be imposed, charged payable and collected a monthly Communication Service Tax to be levied on charges payable by a user of an Electronic Communication Service other than private Electronic Communication Services.”

“The tax shall be levied on Electronic Communication Services supplied by Service Providers.”

“For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of Electronic Communication Service.”

It further provided that the Tax shall be levied on the such Electronic Communication Services like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as Pay per View TV Stations,

Additional details show that if the bill is passed, “The tax shall be paid together with the Electronic Communication Service charge payable to the service provider by the consumer of the service.”

“The tax is due and payable on any supply of Electronic Communication Service within the time period specified under sub-clause (5) of whether or not the person making the supply is permitted or authorized provide Electronic Communication Services.”

The Bill further provides that “The Federal Inland Revenue Service (FIRS) established under section 1 of the Federal Inland Revenue Service (Establishment) Act, 2007 shall be responsible for collection and remittance of tax, any interest and penalty paid under this Bill.”

“The FIRS shall pay the tax collected together with any interest and penalty into the Federation Account.”

The bill further provides that all service providers shall file a tax return to account for the tax.

“The tax return shall be in a form prescribed by the FIRS and shall state the amount of tax payable for the period and any related matters that may be required.

Also provided is that the return and the tax due to the accounting period to which the tax return relates shall be submitted and paid to the FIRS not later than the last working day of the month immediately after the month to which the tax return and payment relates.”

The bill also stated that “The FIRS may extend the period within which the tax return may be submitted and payment made on application in writing by a service provider, where good cause is shown by the applicant.

“The extension shall be communicated to the applicant in writing and shall state the circumstances under which the tax return shall be submitted for the particular period.”

“A service provider who without justification fails to submit to the FIRS the tax return by the date is liable to a pecuniary penalty of N50, 000.00 and a further penalty of N10, 000.00 for each day the return is not submitted.”

In his lead analysis on the reasons behind the new telecoms tax, Senator Ndume said the imposition of tax on communication service is a better way of distributing wealth in such a way that would not affect the ordinary people.

In his response, the chairman of FIRS, Mr Babatunde Fowler welcomed the bill, saying Nigerians talk too much on phones, a comment that has pitched him with many Nigerians who felt apparently insulted.