Governments warned against excessive mobile tax burden - Trends and Politics


Wednesday, 12 July 2017

Governments warned against excessive mobile tax burden

The GSMA warned excessive taxation applied to the mobile sector ignores the positive benefits it can bring, arguing governments should “foster, not hinder” growth.
Its comments come as the industry association published a review of mobile sector taxation in Sub-Saharan Africa.
The research said in 2015 the mobile sector paid, on average, 35 per cent of revenue in the form of taxes, regulatory fees and other charges in the 12 countries where this data is available. Around a quarter of the taxes and fees paid by the mobile industry relate to sector-specific taxation, rather than broad-based charges.
Mobile network operators’ contribution to tax revenue also outweighs their size in the economy. For example, in Democratic Republic of Congo, sector revenue accounted for 3 per cent of GDP in 2015, while mobile tax payments represented more than 17 per cent of total government tax revenue.
For 27 countries where data is available, the total cost of mobile ownership for a handset and 500Mb of data per month represents, on average, 10 per cent of monthly income, “well above” the 5 per cent threshold recommended by the UN Broadband Commission.

Rebalancing sector-specific taxes and regulatory fees can promote connectivity, economic growth, investment and fiscal stability, the association said.
In order to align mobile taxation with that applied to other sectors and best practices from organisations such as World Bank and IMF, governments should consider: reducing sector-specific taxes and regulatory fees; reducing complexity and uncertainty of taxes and fees on the mobile sector; and removing consumer taxes targeting access to mobile services.
Other steps include: spectrum pricing which is supportive of better quality and more affordable services; reduced or removed import duties; supportive taxes for emerging services such as mobile money; and the removal of taxes on international incoming calls.

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