The Chairman of Parliament’s Finance Committee Dr Mark Assibey-Yeboah is pushing for the intervention Ghana Revenue Authority (GRA) and Ministry of Finance (MOF) to help bring some clarity over the implementation of the Communication Service Tax (CST).
Speaking to JoyBusiness on the sidelines of the IMF/World Bank Annual Meetings in Washington DC, Dr Assibey-Yeboah said this intervention would help to deal with concerns being raised by all the interest groups.
This is because it was the Finance Committee of Parliament that worked on this tax, based on documents submitted by the Finance Ministry but it appears its implementation now is not being done the way it was approved by parliament.
He added that “I want to hear from Ghana Revenue Authority and Ministry of Finance because clearing this is a revenue matter.”
Speaking on what has been the best practice in the past, Dr Assibey-Yeboah noted that he does not think there is any serious ambiguity even though he believes their intervention would help a lot.
He added that “the law imposing the Communication Service Tax clearing state that that the tax must be collected at the time of purchase is made, therefore, there is no ambiguity about this levy”.
Dr Assibey-Yeboah noted that the only thing that has changed this time just that the tax has been increased from 6 per cent to 9 per cent.
“I think that we should understand that the finance ministry always implements tax policies and the Ghana Revenue Authority is the implementing agency for every tax in the country” the chairman of parliament’s finance committee added.
Dr Assibey-Yeboah also dispelled arguments that the levy is VAT and its implementation should be treated as such.
Implementation of the Communication Service Tax
For some, the challenges with the implementation of this tax, started just after it got the required presidential assent. While the Ghana Revenue Authority wanted to start implanting the tax from September 4 2019, the telcos, on the other hand, were pushing for it to start from October 1.
According to the telcos, this would have given them enough time to calibrate their systems to fully implement the tax.
However, this was rejected by the Ghana Revenue Authority and the Ministry of Finance as they insisted that the effective date for implementing the tax be September 1 2019.
What influenced the government to review the tax?
Finance Minister Ken Ofori-Atta in the Supplementary Budget announced an increase in the Communication Service Tax from 6 to 9 per cent.
According to the Finance Minister, the increase was to help develop the foundation for a viable technology ecosystem in the county.
This will comprise putting in systems to identify and combat cybercrime, protect users of information technology and combat money laundering and other financial crimes.
Mr Ofori-Atta maintains that sharing ratio would be done in a way that National Youth Employment programs would continue to receive the same portions as the current cycle.
The tax was first introduced at an Ad Valorem Rate of 6 per cent. The tax is levied on charges payable by consumers for the use of communication services.
In 2018, the tax brought in a total of GH¢420 million, representing a 27.7 per cent increase from the estimated GH¢304 million accrued in 2017.
The amount generated from the levy was 4.56 per cent more than the projected GH¢401.8 million in the 2018 mid-year budget.
Based on information JoyBusiness picked up from the Ghana Revenue Authority, TV and Radio stations are now not charging the tax but they would later be directed to do so after the necessary engagement with all industry players.
According to the Finance Minister, the decision to bring onboard TV and Radio stations was to correct the policy gap and ensure equity in the communication industry.
Ministry of Communications’ directive
The Ministry of Communication last week in a statement directed the telecom operators to stop the upfront deduction of the 9 per cent Communication Service Tax from their subscribers.
The statement also added that it was wrong for the telcos to pass on the entire 9% CST on to customers and faulted them for making high profits by charging subscribers the entire 9% tax.
Despite the directive, JoyBusiness is learning that the telcos are still deducting the tax upfront in breach of the order by the Ministry.
Some of them have told JoyBusiness they are still seeking some legal advice before they fully comply.
Others also say it would take a while before the necessary changes are done because they have to calibrate their systems to accept the changes.
Some tax experts and even the Minority in Parliament have also challenged the recent directive from the Ministry of Communication.