Calls for tax on mobile money transaction fees untenable

The call to let telecommunication companies pay taxes on fees they receive on mobile money transactions according to stakeholders in the mobile money industry, remains unpopular.

Telecommunication companies currently charge one percent fees on every mobile money transaction and that, according to the Ministry of Communications, generates about GHc71 million per month.

This has instigated calls from Communications Minister, Mrs. Ursula Owusu for government to consider taxing telcos on monies they earn on transaction fees to enable government to provide requisite developmental projects to the people.

However, the Head of Mobile Financial Services at MTN, Mr. Eli Hini, speaking on the proposed tax, said, the mobile money industry is still developing and should be left to grow without any constraints at this point in time.

He maintains that there are various ways to generate money with mobile money without taxing operators, since players in the industry are already paying the requisite tax on their business returns.

Mobile money can be used to generate more money for government particularly for tax collection purposes due to the wider penetration of the service to bring more people into the tax net.

Conversely, Mr. Hini explained that the decision could also trigger people to revert to the cash system in order to avoid consumer tax on mobile money.

This view is generally shared by users of MoMo services who fret that if applied the proposed tax would be passed on to consumers by the telcos. The general worry is that the proposed tax is a fall out from the recent dispute between the Communications Minister and the telcos over the implementation of the recent hike in the communications service tax from six percent to nine percent. There are widespread worries that the telcos would pass any new tax onto consumers in order to make government appear to be the villain of the situation.

Financial analysts have a different argument pointing out that the special purpose vehicles established by the telcos to operate MoMo under the regulation of the Bank of Ghana are already being taxed on their income and so taxing their user fees would amount to double taxation.

Instructively, even senior officials in government with responsibility for public finances, including Finance Minister Ken Ofori Atta himself are opposed to the tax.

Source: goldstreetbusiness.com