- The cost competitiveness of many businesses in Ghana improved after the recent four per cent cut in the Communications Service Tax (CST) from nine per cent to five per cent claimed several entrepreneurs.
- The tax cut has enthused business strategists to work on how to increase the digital components of their respective business activities in order to maximize the benefits.
The cost competitiveness of many businesses in Ghana improved after the recent four per cent cut in the Communications Service Tax (CST) from nine per cent to five per cent claimed several entrepreneurs. Due to COVID 19, digital channels of communication and data transfer had become a major part of the overall cost structures of businesses. The tax cut has enthused business strategists to work on how to increase the digital components of their respective business activities in order to maximize the benefits of the four percent reduction.
The reduction in the tax, popularly known as ‘talk tax’ was first announced by Finance Minister Ken Ofori Atta in the Parliament during the government’s 2020 budget mid-year review in July. The cut has led to a four per cent fall in telecom charges which reduces the CST to its lowest level since it was first introduced in 2008. Service sector that contributes the most to Ghana’s GDP is expected to get the biggest beneficial impact of the reduction. According to some experts, the four per cent cut in the CST could lead to almost a one per cent drop in the overall operating costs of some heavily digital reliant service companies. It is hoped that the tax cut will further incentivise businesses to turn even more digital for consummating their activities.
The CST was hiked to nine per cent last year. The telcos protesting against the hike, decided to pass on the entire tax – existing six and the added three per cent – to their customers. The telcos complained that they are already struggling with rising operational costs and new investment requirements as surging demand for their services, resulting from the rising popularity of digital channels because of COVID 19 is stretching the capacities of their respective networks.
