Phone company forced to pass on VAT to consumers

New Budget 2017 measures

The new Budget measures that were announced by Finance Minister Winston Jordan will now mean that Value Added Tax (VAT) will be charged on Internet service. This means that consumers will now be taxed for using Facebook, Whatsapp and other digital services.

The damning revelation was made on Thursday by GTT Chief Executive Officer (CEO) Justin Nedd, who joined with a slew of executives of the Private Sector Commission (PSC), to express concerns over many of the new measures announced in the 2017 Budget.
Nedd told media operatives that with the introduction of VAT on broadband Internet service and data plans sold to mobile and corporate customers, the company would incur an additional expense in the vicinity of US$6 million (G$1.2 billion).
According to Nedd, “our concern is for the consumer of the country and while most Governments seeking ways to reduce taxes so they can attract more business, this budget is less business friendly”.
He was at the time speaking about increased tax rates and inputs that businesses could not readily absorb which would inevitably have to be passed on to consumers.
Nedd pointed out that GTT already forked over more than half of its earnings to taxes and pointed to a 45 per cent Corporate Tax.
On the matter of corporate taxes, Nedd used the occasion to point out too that the Minister announced that non-commercial businesses would be subjected to a tax rate of 27.5 per cent.
Nedd pointed out that what this meant was that GTT would be paying a tax rate of 45 per cent, while its competitors would be paying almost half of that.
“We will pay almost 20 per cent tax more than competitors,” Nedd said.
On the matter of the new VAT regime, Nedd told media operatives: “We are stunned at proposals on VAT if implemented as interpreted….We see the harmful impact on consumers.”
He used the occasion to point out that the measure announced by Finance Minister Winston Jordan represents a 180-degree turn on inconsistency in bridging the digital divide and expanding ICT sector.
With regard to the US$6 million that GTT will have to pass on to its customers, Nedd noted that the move by Government to institute VAT on the Internet service  provided to consumers would inherently stymie demand for the service.
He said it would also have a ripple effect on the company and its ability to invest in ever- evolving technology in order to improve its services.
The GTT CEO pointed to the fact that currently customers were clamouring for increased Internet speed and interconnectivity, which would require continuous and costly investments
According to Nedd, the introduction of VAT on the Internet service will have a negative impact not just on GTT and businesses, but on the country as a whole since the regime could in fact impede growth.