India Mobile
Buy Mobiles, Cellphones
 |
 |
 |
 |
|
|
|
|
|
|
|
|
The telecom companies are irked by the no change in the telephone tax regime for the 2006/7 financial year.
Talks between government and the telecoms prior to the 2006/7 budget read a fortnight ago, according to industry sources, had created the impression of a reduction in the tax levy on mobile telephony.
MTN Uganda, Celtel and uganda telecom, the three telecommunication companies have over time complained about the high duty on the sector.
To add insult to injury, Uganda’s finance minister, Dr. Ezra Suruma instead slapped a new excise duty of 5% on landlines and public pay phones to generate Ush2.9 billion (US$15.85 million) for the exchequer.
MTN’s chief commercial officer Mr. Eric van Veen told Business Week that the proposed levy on landlines and pay phones was irresponsible by government as it defeated its policy on ICT development.
“Uganda is a poor country but has the second highest taxes in the world after Turkey,” a disappointed van Veen said, adding that he didn’t know of any country in the world that taxed fixed line telephony.
Officials at uganda telecom said the levy would negatively affect business and government policy. “As far as our position on the 5% levy, we have no option but to implement the tax as proposed by the budget with effect from July 1,” Mr. Mark Kaheru, the firm’s marketing and communication officer said.
The telecommunications sub sector realised the strongest growth compared to that of industry, agriculture or investment through the 2005/6 financial year and has been growing at an average rate of about 25% annually since 1998.
Celtel was Uganda’s pioneer mobile telecom company in 1995. MTN and the uganda telecom mobile division later joined the lucrative industry after three and five years respectively as national operators with special privileges.
About two months ago, Uganda squashed the five year MTN and uganda telecom monopoly following pronouncement of a new telecom policy.
While there are over 1.6 million mobile lines in the country up from about 400,000 in 2002, infrastructure investment has reached over Ush133.5 billion ($72.1 million) up from Ush27.9 billion ($15.1 million) in the early years of the mobile telephony service.
All falling under the top 60 taxpayers in Uganda, the telecoms have felt the pinch of increased taxes and high costs of doing business in the country due to mainly government policy and unreliable electric power supply respectively.
Government in the 2005/6 budget increased Value Added Tax (VAT) and excise duty on mobile phone airtime from 17% to 18% and 10% to 12% respectively to raise Ush36 billion ($20.75 million) and Ush5.2 billion ($2.99 million).
Reacting to the increase then, the telecoms upped their call rates on July 1 2005 and today for every Ush20,000 ($10.8) of mobile phone airtime purchased, Ush6,000 ($3.2) of it goes to treasury.
Details about the increase in local, regional and international calls are yet to be made public though for sure the telecoms will either reduce the number of seconds per unit or increase the cost of a unit for the payphones and landlines.
Asked whether they will pass on the tax burden to the end user, van Veen said, “We have to…..But before doing so, we shall first seek for approval from the regulator, Uganda Communications Commission.”
However, Celtel being minor operators had been paying the levy and therefore won’t be affected by the changes expected to take effect July 1 or there about. “Our rates will remain the same, other factors constant,” a top official at the firm told Business Week.
Relevant Links
East Africa
Uganda
ICT and Telecom
MTN and uganda telecom operate fixed and desk payphones while Celtel operates desk payphones and handsets.
Instead of topping up credit on their personal phones, many people across the country had turned to using the cheaper payphones as an alternative.
Industry players though disappointed by the developments are pleased with the renewed focus on energy and road infrastructure in the new financial year.
