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<h1 class="title">Tax on international inbound calls: Too good to miss… as more African countries are tempted to go this way</h1>
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<p><a href="http://www.balancingact-africa.com/news/en/issue-no-569/top-story/tax-on-international/en">http://www.balancingact-africa.com/news/en/issue-no-569/top-story/tax-on-international/en</a></p>
<p>The list of African countries that have
implemented, are planning to implement or have failed to implement a tax
on international inbound calls is getting longer by the day. The
non-exhaustive list of “shame” includes countries like
Congo-Brazzaville, Guinea, Niger, Côte d’Ivoire, Gabon, Mauritania,
Madagascar, Ghana, Senegal and Liberia. Balancing Act has been following
the story since the failed attempt of the Government of Côte d’Ivoire
back in August 2009. Isabelle Gross looks at the latest twists in the
Senegalese case and the attempt of the Liberia Telecommunications
Authority to introduce a similar tax in one of the poorest countries in
Africa.</p>
<p>Following a presidential decree dated 19th November 2010, Senegal
suspended an earlier decree dated May 2010 that introduced a tax on
international inbound calls with the result that the minimum tariff for
an inbound call increased to US$0.37 per minute compared to the previous
rate of US$0.20. At the time, the overall annual revenue generated by
the tax was estimated at US$135 million per year (60 billion CFA
francs). Less than six months after the suspension decree, Senegal’s
telecoms operators have again to face the reintroduction of the tax on
international inbound calls. However this time, the Senegalese
Government seems to have learnt some lessons from the failed first
attempt as it has been trying to win the support of various interest
groups including the Senegalese diaspora. The Government of Senegal has
announced that it will use the proceeds of the tax in the following
order: US$34 million (15 billion CFA francs) to help the Senegalese
diaspora resettling in the country; US$56 million (25 billion CFA
francs) for rural electrification; US$22 million (10 billion CFA francs)
to support Senegalese buying power and to improve the health, sport and
culture sectors. This amounts to a total of US$113 million (50 billion
CFA francs). It remains to be seen what the remaining US$13 million (10
billion CFA francs) will be used for. </p>
<p>Despite all the efforts that the Senegalese Government is putting in
to get the tax on inbound international calls reinstated, it is still
not going down very well. In order to convince the Senegalese diaspora, a
delegation of Senegalese, including Mr Momar Ndao, the head of the
Consumers Association of Senegal, went to Paris to meet them. On May
31st they held a meeting at the French Consulate to seek the acceptance
of the diaspora in return for the creation of resettlement fund. The
meeting didn’t go very well as shown in the following video clip
published a couple of days later on <a href="http://www.dailymotion.com/video/xj1av5_cacophonie-au-consulat-du-senegal-a-paris-la-diaspora-dit-non-a-la-taxe-global-voice-sur-les-appels_news" target="_blank">Daily Motion</a>. </p>
<p>Since then, the case has escalated further in Senegal: a special
presidential meeting on the topic of international inbound calls has
turned sour and the Union of Telecommunications workers has called a
strike. The Senegalese newspaper, the “As” reported that Cheikh Tidiane
Mbaye, the head of Sonatel (the national incumbent) said during the
meeting that he felt embarrassed because this was not a meeting about a
tax on international inbound calls but rather a meeting against Sonatel.
He further added that “Mr President, you said earlier that we like
money. I would like to add that I don’t like money but I like
development. This is different. You, you like money”. Following this
meeting, the head of the Union, Mamadou Aïdara Diop said that they will
call for a national strike against the tax on international inbound
calls. Interestingly, the latest news on how the tax on inbound calls
will be allocated has changed too: there is no longer any reference to a
fund for the diaspora and the US$135 million will be devoted to US$45
(20 billion CFA francs) for the electricity sector, US$18 million (8
billion CFA francs) for ICT projects (e-cases), US$11 million (5 billion
CFA francs) for digital projects (purchase of computers) and US$11
million (5 billions CFA francs) to improve water supply. The local
Senegalese press has also reported that Global Voice Group might sue the
Government of Senegal for breach of contract. </p>
<p>As pressure is mounting in Senegal for the withdrawal on the tax on
international inbound calls, it is not yet clear how it will end in but
we dearly hope that common sense will prevail. As more and more African
countries think about introducing a tax on international inbound calls,
the leader in implementing such services, Global voice Group (GVG), is
no longer the only game in town. Any telecoms tech will tell you that it
is not rocket science to put in place a monitoring system to control
inbound international calls. Companies that offer the same services as
GVG have understood that the appeal of this game is the easy money that
it generates. </p>
<p>Following on from Senegal, Ghana or Guinea, Liberia has decided to go
the same way. A couple of weeks ago, the Liberia Telecommunications
Authority (LTA) issued a draft regulation on international traffic. The
4-page document must have been written in a hurry because it remains
unclear from the document what type of traffic will be monitored and
taxed. The LTA in its draft regulations refers sometimes to
“international inbound and outbound call data and rates for call
termination” or “to all calls routed to +231 country code irrespective
of the routing method” or “the implementation of a traffic data
monitoring and retention solution for both domestic traffic and
international inbound traffic” or “the international gateway monitoring
facilities … …. shall be used for the monitoring of all traffic”. The
least, this regulation is very confusing apart from the fact that LTA
prescribes that “all international inbound calls terminating to
subscriber number with country code +231 incur a minimum regulatory fee
of US$0.15 per minute (on top of the US$0.12 per minute wholesale price)
and shall be collected by the terminating service provider on behalf of
LTA”. </p>
<p>While telecoms operators in Liberia are turned into tax collectors,
it might be worth reminding the LTA that such a “regulatory fee”
contravenes:<br>- the ITU’s International Telecommunications Regulations
(also know as the “Melbourne Agreement”), Article 6.1.3 states that
fiscal taxes shall normally be collected only on international services
billed to customers in that country; while there are proposals to reform
the ITRs, it is specially recognised that reform of 6.1.3 shall avoid
permitting double taxation.<br>- the World Trade Organisation’s Annex on
Telecommunication Services (1988) which states that taxes should not be
higher than local interconnection rates.<br>- Recommendation D.140 of ITU (2002) requests that tariffs including termination rates should be cost-orientated. </p>
<p>Further, telecoms operators in West African made it clear in the
“Declaration of Dakar” issued in November 2010 that they remain against
such taxation systems. Besides the legal infringements, Liberia will
also need to think about the economic consequences: it will impact
negatively on the international competitiveness of the country and drive
up the cost of doing business at a time of global economic downturn;
the increases in the cost of termination of incoming international
traffic will have a negative impact on Liberian businesses wishing to
develop exports; for Liberian families with members living outside
Liberia, the increased cost of calls to their home country will
translate into fewer, shorter calls and less money available for
remittance to Liberia.</p>
<p>Recently I had an email exchange with a Liberian person living in the
US and his answer on the question of taxing international inbound calls
was “ the LTA's regulatory fee issue is in my opinion, not
progressive”. Progressive is the key point. It is all about developing a
regulatory framework that is an enabler rather than issuing regulations
that take telecoms operators and consumers for a “cash cow”.</p>
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