The introduction of the Communication Service Tax (CST) in Ghana in August 2008 by the NPP Government under Former Presiden John Agyekum Kufuor is another source of income for national development.
The Communications Service Tax (CST) is levied on charges for the use of communications services that are provided by electronic communications service providers.
CST is imposed under Section 1 of the Communications Service Tax Act 2008, (Act 754), CST (Amendment) Act, 2013 (Act 864) and CST (Amendment) Act 2019 (998).
It is paid by consumers to the communications service providers, who in turn pay all CST collected to the Domestic Tax Revenue Division of the Ghana Revenue Authority on a monthly basis.
The GRA is required under the law, to pay the CST collected into the Consolidated Fund.
Please Note: The Communication Services Tax (CST) is different from the Electronic Transfer Levy (E-Levy).
Persons Who Qualify to Charge CST
CST is charged only by electronic communications service providers who are in the provision of electronic communication classified by the National Communications Authority under the provisions of the National Communications Regulations 2003 (LI 1719) and notified in writing by the Commissioner-General of the GRA to charge the tax.
These businesses include:
- National fixed network and mobile cellular network operators
- Internet Service Providers (ISPs)
- Public/Corporate Data Operators
- Providers of Radio(FM) broadcasting services
- Providers of Free-on-air and Pay-per-view television services
- Free zones Enterprises
- Recipients of electronic communications services from Non-resident persons.
An electronic communication service provider is required to levy CST on all charges for usage of communications services provided, in accordance with the provisions of the Communications Service Tax Act 2008 (Act 754).
It is unlawful for any individual to charge the CST.
Services Classified as Electronic Communication Service
Electronic communications service includes,
- A service providing electronic communications
- A closed user group service,
- A private electronic communications service
- A public electronic communications service
- A radio communications service and
- A value-added service.
Benefits of the CST
At least 20% of the revenue generated from the CST will be used by the government to finance the National Youth Employment Programme (NYEP) in particular and support the national development agenda of the country in general.
It must be noted that the introduction of the CST coincided with the removal of import duty, VAT and National Health Insurance Levy (NHIL) on the importation and sale of telephone sets including mobile or cellular phones and satellite phones. This has the effect of reducing the cost of telephone sets and generally mitigating the tax burden that may result from the introduction of the CST.
Prepaid Recharge Cards
An electronic communication service provider is required to account for CST on the face value of prepaid recharge cards sold within the accounting period. The consumer thus pays the tax at the time of purchase of prepaid recharge cards.
Free Zone Operations
A Free Zone Enterprise which provides electronic communication services is required to charge CST on all communication services provided to consumers within the domestic economy and account for the tax to the Commissioner-General of the GRA.
All such Free Zone Enterprises are required to submit monthly CST returns in accordance with the provisions of the Communications Service Act 2008, (Act 754).
Presenting the budget review and supplementary budget for the last half of the year 2019, Minister of Finance Ken Ofori Atta announced an increment of the Communication Service Tax from the previous 6% to 9%.
Current Rate of CST Tax
The Parliament of Ghana passed the amended Communication Service Tax (Amendment) Act, 2020, Act 1025 (the CST Amendment Act or Act) on 27 August 2020. The Act also was assented to by the President on 27 August and gazetted on the same date ad took effect on September 2020.
The amended Act 1025, specifically reduced the rate of the tax from 9% to 5%. This was announced by the President as an additional measure to alleviate the hardships caused by the COVID-19 pandemic.