‘CST directives should have come from GRA’ – Tax expert wades in

‘CST directives should have come from GRA’ – Tax expert wades in
Source: Ghana | Myjoyonline.com | George Nyavor | george.nyavor@myjoyonline.com
Date: 14-10-2019 Time: 07:10:54:pm

A tax expert has criticised the Ministry of Communications for issuing directives recently on the way the 9% Communications Service Tax should be charged by telcos.

William Kofi Owusu Demitia has said the three directives the Communications Ministry issued to the Mobile Network Operators (MNOs) via a letter to the regulator, the National Communications Authority (NCA), should have come from the Ghana Revenue Authority (GRA).

“The power to administer taxes, implement taxes and tax policy directives on its implementation emanates from the Ghana Revenue Authority, therefore, I would have loved that the Ministry of Communication would have been in touch with the Ghana Revenue Authority for them to issue the guidelines on implementation to the telcos because that is the proper way to go,” Mr Demitia said Monday on Joy FM’s Top Story.

The comment by the tax expert adds to the mounting criticism against the three directives to the MNOs by the Ministry.

The controversial directives are as follows:

- CST should be treated the same way VAT, NHIL, GETFUND levy and all other taxes and levies imposed on entities doing business in Ghana are treated. The extraordinary upfront deduction of CST and notification of same to subscribers must stop with immediate effect.

- All unused data and voice bundles purchased by subscribers do not expire and must be rolled over with the next recharge.

- MNOs will be subject to strict compliance with existing Quality of Service (QoS) standard to ensure value for money in accordance with their licence obligations.

Mr Demitia told host of Top Story, Evans Mensah, that “under section 100 of the Revenue Administration Act the [GRA] has the power to give practice note on how a particular law will be implemented, how they understand the law. If GRA had come out to say that implement it piecemeal, that is our interpretation of the law, nobody would have had cause to challenge it as is being done now because as it stands, the GRA will also take the view that its understanding of the law is fundamentally different from the policy directive from the Ministry of Communication.”


Vice President of Imani Africa, Kofi Bentil, has also said the MNOs are not flouting the law by charging the 9% tax upfront.

Mr Bentil said during an interview on Joy FM's Super Morning Show on Monday that the tax is a consumption tax, hence the telcos have the right to either absorb it or pass it on to its customers.

“The telcos have done no wrong. It is a prerogative of the telcos to choose if they want to absorb a tax or not. Especially where the government chooses that the tax be a consumption tax like VAT...that by definition means the tax should be paid directly by the consumer,” he told show host, Daniel Dadzie.

Mr Demetia agrees with this position.

“The upfront deductions are not in conflict with the law. It is what the law requires them to do. The only difference…being that we are being informed [by the telcos] of the actual amount which is being deducted upfront. I really do not see a difference in me being charged the tax upfront and when I use it…as and when I consume. If the computation is right, the upfront deduction and the charge from when the consumer is taking it up becomes the same. So really I don’t see how the lack of upfront deduction ameliorates the situation consumers find themselves,” he said.

The opposition National Democratic Congress (NDC) has also criticised the directives by the Communications Ministry on grounds that they amount to undue interference by the Ministry.

Meanwhile, the Communications Ministry has said the MNOs defying the October 11 directive on the CST will be punished.

Communications Minister, Ursula Owusu-Ekuful, said Monday that the regulator, the NCA, will have a conversation with the telcos still charging the tax upfront for the requisite sanctions to be applied.

“It is an irregular way of deducting taxes,” she reiterated at a press conference on Monday.

Ursula Owusu

Photo: The Minister, Ursula Owusu-Ekuful

“It flies against industry practice and so they should reconfigure their system to treat it the same way they treat other taxes and levies that they are required to collect and pass on. I don’t see how this can be an illegal directive,” she said.

She has dared the telcos to head to court to challenge her directive if they are convinced that she is usurping the law.


The CST, which has been increased from 6% to 9%, has been applied to any recharge purchase by subscribers.

For every GH¢1 of recharge purchased, a 9% CST fee is charged the subscriber leaving ¢0.93 for the purchase of products and services.

Finance Minister Ken Ofori-Atta in the Supplementary Budget announced an increase in the CST from 6% to 9%.