MTN’s CEO Says New Taxes Threaten Telecom Performance

Telecom Companies have recommended that Parliament limits the tax on International Calls to Minimum saying that this will reduce the average termination rate to Uganda from USD 24 cents to USD 18 cents.

They suggest that government should reduce the tax from the proposed 9 USD to 3 USD which they said will still fetch government enough money to cover the gap of money it needs.

Manzen Mroue, the CEO of MTN said that the limitation will register less effect on traffic volume terminated to Uganda and that users will not be forced to look for alternative options for example on Skype, WhatsApp and others.

Mazen Mroue, the MTN Chief Executive Officer before the ICT committee on Monday
Mazen Mroue, the MTN Chief Executive Officer before the ICT committee on Monday

Manzen also suggested that the tax on handsets be zeroed saying that this will increase the Mobile Penetration up to 55% by end of 2014 and increase Internet Penetration up to 2014.

He added that zero tax on handsets will also help to stop phone smuggling through boarders and also reduce fake phones penetration.

Further, he requested to freeze the plan to add more taxes which he said that they are affecting the telecom industry performance.

Manzen said that freezing the plan to add more taxes will secure additional investment, stabilize the market and increase market consolidation and also encourage telecom operators to manage properly the effective market rate and tariffs.

In the 2013-2014 Budget, the Finance Minister Maria Kiwanuka proposed a 1% levy by Uganda Communications Commission on gross income of telecom operators and also proposed the introduction of a levy on International incoming calls.

The same budget also introduced an excise duty at a rate of 10% on money transfer by mobile network operators and other money transfer operators to widen the tax base as well as benefit from the growing sector.

MP Matte Joseph, a member of the Committee, noted that a lot of handsets in the country are smuggled and do not pay tax at all saying that even when the tax is removed nothing is going to change in that respect.

MP Mariam Nalubega, representing Butambala, said that the requests by the telecom companies to scrap the taxes seem late since the taxes are being implemented taking into consideration that the Financial year started in June and that it would be difficult to stop them.

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