Reduction in Communications Service Tax positive – AGI CEO

Chief Executive Officer (CEO) of the Association of Ghana Industries (AGI), Seth Twum Akwaboah, has said the reduction in Communication Services Tax (CST) by government from 9% to 5% is going to make some positive impact on Ghanaians.

Minister of Finance Ken Ofori-Atta, in his delivery of the Mid-Year Budget Review to lawmakers, noted that Communication Services Tax has been reduced from 9% to 5% for the next six months to help cushion Ghanaians as a result of the COVID-19 pandemic.

“In the short-term, we will reduce communication services tax to the consumer as more and more people work remotely and utilise online services. We will count on the telcos to match this reduction by reducing their tariffs. This is important for our youth, entrepreneurs and the burgeoning fintech industry,” the minister said.

To this, Mr. Akwaboah said: “The reduction in Communication Service Tax is going to have some impact. These days everybody is using electronic means for communicating, doing business and all that, so any reduction in cost is going to be positive”.

He is however wondering how the reduction is going to translate into actual fact in the case of communication, adding that “it is a tax reduction, but it does not mean that it will impact so positively or in a big way; it all depends on how the numbers works out”.

Government introduced CST in 2018 at a rate of 6% levied on charges payable by consumers for the use of communication services. The tax gained a total amount of GH¢420million, representing 27.7% in 2018 – an increase from an estimated GH¢304million accrued in 2017.

Government in 2019 increased CST from 6% to 9%; the increment, according to government, was to enable it get the fiscal space to create a viable technology ecosystem to among other things identify and fight cybercrime in the country.