Implementation of the new rate for the communication service tax (CST), commomly known as the talk tax, is to take effect from September 2020, President Akufo-Addo has said.
Addressing the nation Sunday 26 July 2020 on government plans to curb the spread of the coronavirus disease in the country, President Akufo-Addo said, “The communication service tax has also been reduced from 9% to 5%, effective September 2020.”
Speaking during his presentation of the 2020 Mid-Year Budget Review to Parliament on 23 July, the Minister for Finance, Ken Ofori-Atta, announced that the tax would fall from 9% to 5%.
“In the short term, we will reduce the CST from 9% to 5% to reduce the cost of communication services to the consumer as more and more people work remotely and utilise online services,” he said.
“We will count on the telcos to match this reduction in the CST by reducing their tariffs. This is important for our youth, entrepreneurs and the burgeoning fintech industry.”
Background
The communication service tax (CST) was introduced in 2008 at an ad valorem rate of 6%. The tax is levied on charges payable by consumers for the use of communication services.
In 2018 the tax brought in a total of GHC420 million, a 27.7% increase on the estimated GHC304 million accrued in 2017.
The income generated through the levy was 4.56% more than the projected GHC401.8 million in the 2018 Mid-Year Budget.
The telcos started charging customers a revised CST from 1 October 2019, after the Minister of Finance, Ken Ofori-Atta, announced an increment in the tax from 6% to 9% in the Supplementary Budget.
Justifying the increment then, the Finance Minister said it was aimed at creating a viable technology ecosystem to identify and combat cybercrime, among other things.
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