A former Finance Minister Seth Terkper says any taxation levied on fees charged by mobile money operators on transactions would amount to double taxation.
Mr. Terkper stated that income earned by MoMo operators are already subject to VAT and any separate tax will be duplication and “punitive” on the companies.
In a series of posts on microblogging site Twitter, the former Finance Minister explained that telecom services were included in the original VAT Act (Act 546) passed in 1999.
“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 percent) on same. Govt should be clear, if it is talking about “another consumer or “umbrella” tax, likely in 2020,” he tweeted.
He further attached excerpts from the original VAT Act in which he argues that sales and services tax which were levied on companies including telecom operators were amalgamated into the new Act.
The former Finance Minister’s concerns follow remarks from Communications Minister Ursula Owusu Ekuful that the government should be able to tax the transaction fees charged by mobile money companies.
Taxing MoMo transactions
Addressing the press in Accra on the performance of the Common Monitoring Platform operated by KelniGVG, the Communications Minister said mobile money companies earn on average GH¢71 million monthly as transaction fees adding that particular income “ought” to be taxed.
“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,” the Minister stated.
The total value of mobile money transactions for the first six months of this year reached GH¢140.2 billion, up from the 104.6 billion cedis recorded in the same period in 2018.
Data released by the Bank of Ghana shows that this represents a 34 percent rise in the value of transactions recorded for the period under review.
Meanwhile, the patronage of cheques for the first half of this year witnessed a drop compared to the same period last year.
Between January and June this year, the total volume of mobile money transactions reached 915.8 million compared to the 655 million recorded in the same period last year.
This translates into an estimated forty percent growth.
Again, the total value of mobile money transactions increased by 34 percent to reach GH¢140.2 billion cedis; up from the GH¢104.6 billion recorded in the same period in 2018.