GHANA:No VAT on mobile money charges

Government has assured operators and consumers of mobile money service that plans to impose a 17.5 percent Value Added Tax (VAT) on mobile money transaction will now be shelved after assessment of its effect on the financial inclusion agenda of policymakers.

The assurance, which was convened to stakeholders in the mobile money space in Accra on Thursday by the Chief Executive Officer of the Ghana Chamber of Telecoms, Kwaku Sakyi-Addo, is a relief to players in the sector who dreaded the impact of the consumption tax on mobile money transactions.

Mr. Sakyi-Addo, who oversees operations of the lobbyists’ arm of the mobile network operators, said after several discussions with the government, the Finance Ministry, knowing the role of mobile money in financial intermediation, will no longer push to implement an initiative that will stifle the growth of mobile money sector.

Last year, the introduction of VAT Act 870 saw the imposition of 17.5 percent VAT/National Health Insurance Levy (NHIL) on some selected fee-based financial services with mobile money the key omission.

The reason then ascribed for the omission of mobile money was that the sector was at its infancy and any form of taxation could effectively strangle it. Within that time, there has been tremendous progress in the sector with mobile telecom operators establishing separate companies to deal with their mobile money operations.

This year alone, the value of all mobile money transactions as at September stood at GH¢51.4 billion which came from over 368.3 million transactions. This strong performance in addition to past robust performance, prompted fears that government would look to impose the 17.5 percent VAT/NHIL on the charges made on transactions.

The CEO of the Chamber Mr. Sakyi-Addo insists that the mobile money sector is still fledging. 

“Three out of four adults have still not registered for mobile money. So we want it to grow and this means we don’t start milking it and that’s the message we believe is not difficult to maintain with the central bank and the Finance Ministry,” he added.

Mr. Sakyi-Addo was speaking to the B&FT on the sidelines of a forum organised to mark the fifth anniversary of the Telecoms Chamber. According to him, the central bank which issued the E-Money Issuers Guidelines which regulates the operations of mobile-money, is still in talks with the mobile telecom operators to ensure that the sector sustains his growth.

The central bank is currently working at making the mobile money service interoperable, that is, the ability to send money across networks. Currently, there are four mobile network operators offering mobile money services in a market of an estimated 27 million people.

The active mobile money customers, according to the Bank of Ghana, stands at 8 million even though about 18.8 million people have been registered as mobile money customers as at the end of September this year.

Mr. Sakyi-Addo is confident that given the strategic guidance provided by the central bank, the sector prospects will remain bright.

Five years of policy advocacy

According to Mr. Sakyi-Addo, “a lot has happened in five years; and in an industry that’s as dynamic as telecommunications. In these five years, the number of sim cards has grown nearly 70 percent to a penetration rate of 134 percent, and data connections have more than doubled.”

“Five years ago, Mobile Money was just getting started. The value of Ghana’s annual transaction was around GH¢400 million per annum. In 2015 that figure had grown to GHc35 billion, and for the first half of 2016, it had reached GH¢30 billion.”