A project paper submitted in partial fulfillment of the training course Mobile Sector Taxation by the GSMA and UKTA.

1. REBALANCING MOBILE TAXATION
TO ACHIEVE GROWTH [CASE FROM GHANA]
By. Derek Barnabas Laryea
derek.laryea@gmail.com

2. Outline
 Background
 Country Profile
 Current Tax Profile (Consumers + MNOs)
 Impact of Specific Sector Taxes
 Snapshot of Revenue & Taxes (MTN 2017)
 Summary
 Policy Recommendation

3. Background
 The mobile sector in Ghana has enabled 19 million
Ghanaians, about 60% of the population, to access
the benefits of mobile communications. Source: GSMA
Intelligence
 Mobile users and Providers are subject to taxes on
devices and usage, which increase the total cost of
mobile ownership and create barriers to affordability
and are inefficient, limiting digital inclusion and
general growth
 A rebalance and adjustment of Ghana’s Tax Policies
on the mobile sector can further expand ICT usage

4. Country Profile
General Indicators
 Population: 27million (GSS 2015)
 Area: 238,537sq.km
 Region: West Africa Sub-Region
 ICT Regulator: National Information
Technology Agency (NITA)
Frequency Indicators
 Regulator: National Communications Authority
 Number of TV Stations: 93
 Radio Stations: 313
ICT Indicators
 Telecom Operators: 6 Operators (NCA, 2017)
 Broadband Wireless Access: 4 Operators
 Mobile Penetration: 130.91% (Sept 2017)
 Voice Subs: 37.45M (Sept 2017)
 Data Subs: 22.10M (July 2017)
 Domestic Bandwidth Capacity: 16TBps (MoC,
2015)
 Bandwidth Cost Dedicated: $3,000
 Submarine Cables: 5 submarine cable firms
 Internet Service Providers: 30 (NCA, Ghana)
 VSAT Data Providers: 57
 Domain name: .gh

5. Urbanization & Geography
Urban Geography is about 46%
Rural Geography is about 54%
Ghana has a lot of Mountains,
Rivers and Forests with extremely
large vegetation cover.

6. Consumer Taxes
Key
• Services refers to the point of activation, mobile broadband, airtime
vouchers, calls, SMS etc.
ConsumerTaxes
• VAT on Devices (15%)
• Customs Duties (Up to 25%)_
• National Health Insurance Levy 2.5%
• VAT on Services (15%)
• Communications Service Tax (CST) on
Services (6%)
• National Health Insurance Levy (NHIL)
on Services (2.5%)

7. Mobile Operator Taxes
Key
• NFSL is National Fiscal Stabilization Taxes
• SIIT is Surcharge on International Incoming Traffic
MobileOperator
Taxes • VAT, Custom Duties, NHIL on Imported network
equipment and SIM cards (15%, >20%, 2.5%, 2.5%)
• Corporate Tax & NFSL on Profits (25% & 5%)
• SIIT & CST on Interconnection ($.19 & 6%)
• Regulatory & USF Fees (1% of Net Revenues for both)
• Gateway License Fees (fixed $200k)
• Right of Way fees ($4,000/km on average)
• Microwave Fees (per link)
• Numbering Fee (Up to $.50 per number)

8. Impact of Sector Specific Taxes
 The Mobile Industry alone in
Ghana contributes about about
8% of the Government’s total tax
revenues
 Obviously due to discrepancies in the treatment of
this sector to that of other sectors.

9. Snapshot – Revenue + Taxes for MTN
2017
% of Tax
Authority
Fees to
Revenue
31%
% of Reg.
Fees to
Revenue
5%
% of
Revenue
Collected
64%
Revenue Vrs Tax Split• Total Revenue Collected by
MTN is ¢3,4bn cedis
• Revenue Authority received
¢1.28bn cedis of the Revenue
• Regulator & USF fees
constituted another ¢160m
cedis of the total revenues.
• The ¢3.4bn Revenue is net of
consumption tax VAT 516m and
CST 179m.
• Commissions, Rent, Capex,
VAS Costs, Maintenance,
Marketing, Salaries etc
constitute other parts of
remaining revenue.
• Using MTN brings in greater
context of what happens in the
market since it has a market
share of about 50%
• 36% of the Revenue generated
went to Govt in the form of
Taxes

10. Summary
 From the shown slides, clearly when a business
has to commit close to 40% of their earnings to
direct taxation and the remaining 53% to other
OPEX, there is very little left to incentivize the
player .
In Ghana, aside MTN being the only profitable
from the earlier snapshot, the other 4 mobile
operators do not make profits
 There is an urgent need for policy makers to
consider the widely recognized principles of

11. Policy Recommendation (1)
 Such a drive to relook at taxation principles will
increase mobile and broadband penetration
and usage will further increase productivity
and economic growth for Ghana.
 In Ghana, mobile-specific taxes such as the
CST lead to inefficiently low consumption CST
on interconnection charges increases the cost
of calls between networks.

12. Policy Recommendation (2)
 Customs duties on Operator equipment dis-
incentivize investment in infrastructure and not
an economically viable approach to enhance
rural connectivity.
 Increased economic growth and GDP will
expand the tax base, enabling the government
of Ghana to achieve additional revenues

13. Policy Recommendation (3)
 All general barriers to affordability needs to be
relooked at and rebalanced by government .
 Such moves will underscore Governments
own commitment to the growth of the sector
and thereby increase the use of ICT in all
areas of the economy.

14. Conclusion
Materials Sourced
 www.nca.org.gh
 https://www.gsma.com/publicpolicy/wp-
content/uploads/2016/09/GSMA2015_Report_DigitalInclusionAndMobileSe
ctorTaxation2015-Summary.pdf
 http://www.statsghana.gov.gh/
 Mobile Operator Data (MTN 2017 financial report etc.)
 World Economic Report
THANK YOU!!!