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Ghana’s telecoms industry paid GH¢4.3 billion taxes in 2021

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telecoms industry, taxes

The mobile telecoms industry in Ghana paid taxes, other payments and remittances to the tune of ¢4.3 billion to the government and its allied agencies in 2021, the Ghana Chamber of Telecommunications has revealed.

Chief Executive Officer (CEO) of the Chamber, Dr. Ken Edem Ashigbey said the amount represents about 7.7 per cent of government’s total tax revenue for that year and that is very significant coming from just on industry.

He was speaking at the launch of the 2021 Telecom Industry Total Tax Contribution Report, which is a study aimed at measuring the size of the contribution that members of GCT made to the government of Ghana during the 2021 fiscal year.

Dr. Ashigbey stated that, in terms of ratio, for every GH¢1 that comes into the industry, about 46 pesewas goes back to the government in the form of taxes and levies.

The breakdown

A breakdown of the taxes into the various components shows that Corporate Income Tax (CIT) of GHS883.6 million remains the largest tax type from the industry.

This according to Dr. Ashigbey is a decline of about 9% from last year’s contribution of GH¢976 million.

Furthermore, the report shows that Value Added Tax (VAT) as the second biggest tax line of the industry, stood at about GH¢657.4 million.

The CEO indicated that levies, which include the National Health Insurance Levy (NHIL), Ghana Education Trust Fund (GETFund), and the COVID-19 Levy, contributed a a total of GH¢571.4 million last year.

Meanwhile, the other major contributor from the industry to government’s tax revenue was Withholding Tax (WHT), which contributed about GH¢722.2 million to the kitty.

The report said Communications Service Tax (CST) also contributed GH¢424.7 million, while Pay as You Earn (PAYE) contributed GH¢138.1 million and other taxes contributed the remaining GH¢266.7 million.

Telecoms is a utility

Dr. Ashigbey noted that even though telecommunications is a utility service like electricity and water, it is being taxed as heavily as alcohol, tobacco and other such industries are being taxed.

He bemoaned how the industry is still seen as a cash cow that needs to be milked, even though this is not how it should be.

The CEO added that taxation has been deteriorating because there is a lot of industry-specific taxes which distort the market and take investments away, adding that if some of the distorting taxes are removed, the industry will be able to invest and contribute even better to the realization of digital inclusion in a faster and more meaningful way.

Mobile Financial Services

Dr. Ashigbey said that in 2021, there was no E-levy, so active mobile finance customers in the year under review were 17.9 million and active registered agents were 442 thousand.

“This is the number of people employed by the mobile financial services industry in 2021, and these numbers are huge.

“It means that particular attention should be paid to it to reduce the unemployment rate in the country” he explained.

He indicated that the total transaction volume in 2021 was 11.6 million a day with a float balance of GH¢9.7 billion, which is money the industry has been able to mobilise, which sits at the bank.

This according to him helps the Bank of Ghana in its monetary policy planning and fiscal policy.

Mobile Money operators in the said year according to him made about GH¢272 million in service charges.

In terms of direct jobs, the chamber in 2021 was employing 6,100 people and over 1.2 million people indirectly.

Dr. Ashigbey lamented the fiscal situation of telecommunication industry players who are increasingly burdened by their tax obligations and their operational costs, especially following the COVID-19 pandemic of 2020.

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