A member of Parliament for Ejumako-Enyan-Esiam, Ato Forson has said the directive issued to the to Mobile Network Operators (MNOs) to halt the upfront deduction of the Communication Service Tax (CST) is illegal and wants the government to withdraw the directive.
The Communications Ministry has ordered MNOs to stop passing on the 9% Communication Service Tax (CST) to subscribers.
In a letter addressed to the National Communications Authority (NCA), the Communications Ministry stated that the 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.
“At a series of meetings held between the Ministry of Communications, MNOs and the NCA on October 7 and 8, 2019, we were informed that prior to September 4, 2019, MNOs had not been passing on CST to subscribers but had decided to take advantage of the 3% increase to pass on the entire tax to subscribers. This has effectively increased their profit margin at the expense of subscribers,” the letter explained.
But Mr Forson in a letter addressed to the Communication Minister said: “under the Revenue Administration Act 2009 (Act 791), the administration and management of tax revenues reside in the Ghana Revenue Authority and CST Act 2019 does not apply the principles of the Value Added Tax VAT).”
“From the two Acts, the Minister for Communications does not have the powers to issue an administrative order on how tax policy should be implemented; and secondly, the CST cannot be treated in the same way VAT is treated. The issuance of the directive is, therefore, an illegal act and should be withdrawn with immediate effect,” he added.
According to him, “If the government wishes to treat the CST as VAT, the Ministry of Finance should be encouraged to present a CST Amendment Bill to parliament for the necessary action to be taken.”
Read the full letter:
Mrs Ursula Owusu-Ekuful
Hon. Minister of Communications
Ministry of Communications
P. O. Box M.38
Accra, Ghana
Dear Hon. Minister,
Ref: Directives on Communication Service Tax (CST) Implementation
Reference is made to a Directives on Communication Service Tax (CST) Implementation issued by the Hon. Minister for Communications, Ref. No. SCR/HB.128/239/02, dated 9th October 2019.
The Directives instruct that the Communication Service Tax (CST) be treated the same way VAT, NHIL, GETFUND levy and all other taxes and levies imposed on entities doing business in Ghana are treated.
I would like to point out that: (i) under The Revenue Administration Act 2009 (Act 791), the administration and management of tax revenues reside in the Ghana Revenue Authority, and (ii) the CST Act 2019 does not apply the principles of the Value Added Tax (VAT) Act 2013 (Act 870).
Form the two Acts, The Minister for Communications does not have the powers to issue an administrative order on how a tax policy should be implemented; and secondly, the CST cannot be treated in the same way VAT is treated. The issuance of the directive is, therefore, an illegal act and should be withdrawn with immediate effect. If the government wishes to treat the CST as VAT, the Ministry of Finance should be encouraged to present a CST Amendment Bill to parliament for the necessary action to be taken.
It is unconscionable for the Government to increase the CST but insist that telecommunications companies hide the deductions from the consumers. If the government thinks the policy is making it unpopular, it should come to parliament to repeal the Act.
Kindly accept, Honourable Minister, the assurances of my highest consideration.
Signed
Cassiel Ato Forson, MP
Ranking Member
Finance Committee
Parliament of Ghana
Cc: Hon. George Neny Andah
Deputy Minister for Communications
Hon. Vincent Sowah Odotei
Deputy Minister for Communications
The CEO
MTN
The CEO
Vodafone
Law Offices of Ayine and Felli
By: Efo Korsi Senyo / awakenewsroom.com
