Telcos Contribute Billions of Cedis to Ghana’s Economy

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Latest study conducted by Price Waterhouse Coopers (PwC),  a multinational consultancy firm, for the Ghana Chamber of Telecommunications (GCT) has disclosed that telecom operators in the country paid a whopping amount of GHC1.05 billion in total taxes in 2014 alone to the government and its agencies.

The amount depicts a magical increase over the GHC1.04 billion the six telecom companies namely MTN, Vodafone, Airtel, Tigo, and Expresso paid in 2013, study noted.

Addressing journalists at the launch of the PwC Total Tax Contribution Report, the Leader of Tax Services at PwC Ghana, George Kwatia stated: “This contribution forms 6.9% and 5.4% of the Government of Ghana’s tax revenues for the respective years”.

Mr. Kwatia explained that the total tax contribution of the telecommunications sector was the first study carried out for the Telecoms Chamber by his outfit.

It covers all taxes paid in Ghana by the members of the Telecoms Chamber, namely MTN, Vodafone, Airtel, Tigo and Expresso as declared in response to a questionnaire completed by the members during a general survey conducted by PwC Ghana on behalf of the GCT.

The survey covered the tax years ended 31 December 2014 and 31 December 2013 with the years 2012 and 2011 being used for comparative analysis.

In his welcome address, the Chief Executive Officer of the Ghana Chamber of Telecommunications, Kwaku Sakyi-Addo maintained that the mobile telecommunications industry has been one of the most vibrant sectors of the Ghanaian economy.

The liberalization of the sector in the early 90s, according to him brought down the curtain on decades of state monopoly, and with it an estimated $6 billion dollars in investments over the past 18 years.

Mr. Sakyi-Addo was quick to add: “The industry employs over 5,000 people directly, but has spawned some 1.5 million jobs indirectly, while supporting and catalyzing other sectors such as banking, media, advertising, agric, health, education, creative arts/entertainment as well as facilitating social and familial communication and stability”.

Notwithstanding these strides in the industry, he noted that there remain major opportunities including the Internet of Things–for even greater growth for data usage, apps development and mobile financial services whose surface, according to him has only been scratched.

“These will be drivers for social inclusion, overall efficiency and productivity in conducting business, running the public services and bureaucracy, and catalysts for economic growth”.

However, these opportunities, the Telecom Chamber CEO emphasised require further substantial investments buoyed by a predictable and nurturing policy and regulatory environment that is competitive with other markets.

“We recognise that there is a need for adequate information and transparency about the telecommunications industry’s cost, tax contribution and compliance and its overall enabling impact and multiplier effect on the economy.

This should influence policy initiatives and regulatory responses that ensure the appetite for investments in the Ghanaian market remains healthy and enables the promise of digital inclusion and a connected society to be met before long”, Mr. Sakyi-Addo stated.

“It is for this purpose that Ghana Chamber of Telecommunications commissioned this PwC study”.

Key highlights of the study results:

The Total Tax Contribution (TTC) of the telecommunications sector measures the tax contribution that members of Ghana Chamber of Telecommunications (GCT) have made to the Government of Ghana.

Besides the tax contributions, the study covered other regulatory fees paid to government agencies, discretionary contributions like corporate social responsibility, employment trends and capital investments made by the members of the GCT. Five members of the GCT were considered for the study.

The Total Tax Contribution methodology measures all taxes borne and collected by the members of GCT. Total taxes borne are taxes which are a cost to the members when paid and affects their financial profitability.

Total taxes collected are taxes collected and administered on behalf of the government, which are not a direct cost to the members but are generated as a result of the member’s business activities and the activity of collection has cash flow implications to the members.

The mobile telecommunications sector has been one of the most vibrant sectors of the Ghana economy since its liberalisation in the early nineties. The study has gathered information about the industry’s tax contribution and overall enabling impact on the economy. This should influence policy initiatives and regulatory responses which ensure that a healthy investment climate is maintained in the Ghanaian market to promote digital inclusion and a connected society.

Key themes and findings

In 2014, the total taxes borne (including profit taxes such as Corporate Income Tax, National

Fiscal Stabilisation Levy, people taxes, product taxes and property taxes) increased by 22% in cedi terms.

 The taxes collected was about 2.5 and 3.2 times the amount of taxes borne in 2014 and 2013 respectively. The members of the chamber contributed far more in other taxes paid to the national revenues than is recognised through profit taxes alone.

 Total taxes borne and total taxes collected resulted in a total tax of GHC1.04 billion and GHC1.05 billion in 2013 and 2014 respectively from the sector. This contribution forms 6.9% and 5.4% of the Government of Ghana’s tax revenue (Ministry of Finance, 20141 and 20152 budget statements) for 2013 and 2014 respectively.

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