Telcos agree to stop upfront deduction, but will pass on 9% CST

The Ghana Chamber of Telecommunications says its members will now comply with government’s directive asking them to stop upfront deduction of the Communication Service Tax (CST).

The telcos however refused to absorb the 9 percent CST as was done in the past when the rate was at 6 percent.

After “fruitful discussions” with government on Wednesday, the Chamber said an agreement was reached to “stop upfront deduction of CST but rather apply the tax through a tariff adjustment”.

Communications Minister Ursula Owusu-Ekuful early this month instructed the telecos to immediately stop upfront deduction and subsequent notification to subscribers.

“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. This extraordinary upfront deduction of CST and notification of same to subscribers must stop with immediate effect,” she directed.

Meanwhile, the Ghana Chamber of Telecommunications’ statement signed by the Chief Executive, Kenneth Ashigbey said the upfront deduction was “legal” and was done “in good faith”.

The deduction, it explained, was in line with how the Ghana Revenue Authority calculates and charges the CST.

“However, we understand stakeholders’ concerns and have aligned on the current agreement to implement a price increase to pass on the tax instead of upfront deductions. It is worth noting, that despite this arrangement to stop upfront deductions, GRA will still calculate and account for the CST as an upfront charge.”

The statement therefore announced, “the price increase will take effect by November 26th 2019, as the industry requires a number of weeks to complete the reconfiguration of our systems to accommodate the commercial and technical requirement that the exercise necessitates to ensure an even smooth experience for customers.”