MTN, stakeholders caution against additional tax on Mobile Money transactions

By Nana Appiah Acquaye, Accra, Ghana 

MTN Ghana has cautioned that additional taxation on Mobile Money transactions would erode the efforts of investors in driving Ghana’s digitisation agenda.

Ghana’s telecom giant, who is currently leading discussions to protest against the possible imposition of additional taxes on Mobile Money transactions and other e-payment platforms in the country, is of the view that Mobile Money has the potential of winning the war against cash in Ghana hence the need for the government to desist from entertaining the idea of imposing new taxes on its transactions.

Although the government of Ghana has so far not made any moves to suggest its intent to introduce new taxes on Mobile Money transactions, industry observers have pointed to recent developments in Uganda and Tanzania where their governments imposed taxes on social media and mobile money platforms, saying moves such as these could influence countries including Ghana to follow suit. 

Last month alone the government of Uganda collected an amount of Shs7billion after its parliament imposed a tax on the use of social media and mobile money transaction in a bid to raise revenue. The Excise Duty (Amendment) Bill 2018 which went into effect on July 1 required Ugandans to pay 200 Ugandan shillings ($0.05) daily to enable them use social platforms like Facebook, WhatsApp, and Twitter whilst a 0.5 percent was imposed on mobile money withdrawals.

Following the Uganda government’s footsteps, the Tanzanian government also introduced and implemented its new tax on bloggers and online content producers and publishers. The new tax compelled bloggers and other online developers to pay a fee of USD $930.

But speaking at the just ended MTN Stakeholders Meeting held in Accra on the theme: Digitizing Payments in Ghana, The Implications of Additional Taxes on MoMo Transaction, the Managing Director in charge of Mobile Financial Services at MTN Ghana, Eli Hini, noted that its important Ghana does not consider going in a similar direction, as the benefits of the services far outweighs any gains from taxes.

Mr. Hini asked the government to instead focus its attention on widening the country’s fintech ecosystem through digitising the Ghanaian economy by payment of fees, rates, taxes, and levies.

The newly appointed Managing Director of Barclays Bank Ghana, Abena Osei-Poku, giving her remarks as a stakeholder in the e-payment ecosystem at the meeting cited the negative impact the imposition of the 17.5% VAT/NHIS by the government in 2015 had on the country’s financial sector and reiterated with emphasis the need for a thorough consideration of the country’s informal sector.

“Any discussion regarding the introduction of taxes on mobile money payment should take into consideration the important informal sector in Ghana, as open individuals and businesses has several incentives to remain outside the formal system that collect taxes and financial transactions needs,” she said.

Contributing to the discussion, the Chief Executive Officer of the Ghana Telecommunications Chamber, Kenneth Ashigbey reminded stakeholders of how far the telecom industry has come and the need for the government now to consider the telecom sector and mobile financial service rather as cash horse that needs to be developed to steam up than a cash cow always ready to be milked.

He asked the government to focus its attention on developing a national payment strategy that would ensure that instead of taking the money out of the system it’s rather kept within. And according to him that can be done if the government starts implementing directives that ensures that all government payments are done electronically

Mr. Ashigbey is of the firm opinion that if the government embarked on making its payments electronically, it would not only  cut out or blocked all the leakages that happen within the payment system but also  ensure that ones the money is saved it can be visibly seen.

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