Mobile Money transactions must not be taxed to prevent double taxation – Terkper

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Seth Terkper, a former Finance Minister has urged the government not to add any tax on fees charged by mobile money operators on transactions since it will be considered as double taxation.

He made it known that VAT has been already added on income earned by Mobile Money operators and any other added tax will be termed as double and that will be a cheat on such companies.

The former Finance Minister in a post on Twitter said that telecommunication services were included in the original VAT Act (Act 546) passed in 1999.

He said, “Talk of MoMo or “umbrella” tax is duplication and punitive for firms & consumers. Telcos pay income (corporate) tax on MoMo fees & charge VAT/CST (now at higher 9 per cent) on same. Govt should be clear if it is talking about “another consumer or “umbrella” tax, likely in 2020.’’

He quoted from the original VAT Act in which he argues that sales and services tax which were levied on companies including telecommunication operators were amended into the new Act.

He raised this argument following a statement made by the communications Minister Mrs Ursula Owusu Ekuful that, the government should be able to tax the transaction fees charged by mobile money companies.

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The communication minister in a press in Accra on how Common Monitoring Platform operated by KelniGVG is performing and emphasized on the amount mobile money companies earn monthly as transaction fees which sum around GHC71 million and requested for it to be taxed.

She said, “Further breakdowns of transaction types for informed policy-making decisions are also possible with the platform… of particular interest to me and this is where the Finance Minister and I diverge because I think that the GHS71 million which is generated by the operators in transaction fees they ought to pay taxes on that revenue to the state; we are still having conversations about that.’’

MoMo performance

The first six months of this year, the total value of mobile money transactions reached GH¢140.2 billion, up from the 104.6 billion cedis recorded in the same period in 2018. This represents a 34 % rise in the value of transactions recorded for the period under review as stated in a released Data by the Bank of Ghana.  Whiles the patronage of cheques for the first half of this year saw a drop compared to the same period last year.

Also, the total volume of mobile money transactions between January and June this year reached 915.8 million compared to the 655 million recorded in the same period last year. This represents a 40% increase.

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