Connect with us

Top Business Journal

Ghana among top 50 countries globally with highest taxes in the mobile sector

Business

Ghana among top 50 countries globally with highest taxes in the mobile sector

Mobile access is bringing wide-ranging benefits to countries worldwide and is supporting economic and social growth across all sectors of the economy. Mobile services support investment and innovation in the wide economy and, through the creation of business services and applications, further support economic and social development.

Across the globe 3.4billion people subscribe to a mobile service with mobile operators estimated to generate 1% of global Gross Domestic Product (GDP). In the last decade, the mobile sector in Ghana has enabled 12.6million Ghanaians, about 50% of the population to access the benefits of mobile communications.

The mobile sector also contributes to Ghana’s long-run economic and fiscal stability, both through its own contribution to the economy and government revenues and through the contribution of the associated ecosystem of industries.

Mobile is the most cost-effective way of extending access to ICT and the internet in Ghana and is therefore fundamental to helping the government achieve its objectives of expanding ICT infrastructure and access and promoting the use of ICT in all sectors.

By improving the availability of information and reducing transaction costs, mobile services increase productivity and enable business and markets to operate more efficiently. These services also support investment and innovation in the wider economy, for example in the provision of network equipment and the creation of business services and applications. Thanks to these effects, access to mobile services leads to economic growth.

However, several barriers such as lack of network infrastructure, low levels of literacy and digital skills, affordability and taxation of services may prevent the realization of the benefits for mobile access. High levels of mobile-specific taxation risk mobile sector growth as well as Ghana’s overall economic growth.

 

 

In GSMA’s 2015 Report on Digital Inclusion Mobile sector taxation, Ghana ranks among the top 50 countries in the world with heavily taxed mobile sector. Mobile operators in Ghana are subject to 14 different taxes and regulatory fees in addition to various one-off charges.

Mobile operators pay US$650Million in taxes each year representing about 40% of total revenues in the sector. Mobile services such as calls, SMS and data usage are subject to VAT, NHIL and additional Communication Service Tax (CST) of 6%

The mobile sector makes a significant contribution to Ghanaian government revenues and public services. However, it is important to recognize that while taxation on the mobile sector may deliver short-term benefits to the government, this comes at the cost of long-run economic growth and is ultimately counterproductive for the government.

By reducing taxes on the mobile sector the Ghanaian government can not only increase digital and financial inclusion and economic growth but it can also recover higher tax revenues through more efficient and broad-based taxation.

Source:GSMA 2015 Report on Digital inclusion and mobile sector taxation

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

More in Business

Facebook

To Top