“Momo agents cannot transfer new tax charges to customers” – Lawyer

State Attorney, Lawyer Andrews Adugu has said it is illegal for mobile money agents to transfer the proposed 10% tax on their earnings to their customers.

A statement released by the Mobile Money Agents Association of Ghana released on Friday, June 25, 2021, indicated that the government was set to introduce a new 10% tax on Momo operators. The tax was to be effected on the cash-out service wallet of operators.

In what they described as “unfortunate,” the Association noted that “the 10% imposition if agreed to, means  is going to apply to all the various business units … to pay more than 100% as tax and no business can survive in such an environment.”

Consequently, the leadership of the association advised agents across the country to “transfer the cost to the customer.”

“We are advising our members to transfer the cost to those who seek our services. It is not in our interest to get to this point, but there is no room for options hence our action to transfer the cost to the close to 20million active users of Momo to bear it,” the statement added.

On Monday, June 28, 2021, an update available to Dennislaw News indicates that the association is urging the public to “take note of the new changes of mobile money service charges [taking] effect from 1st July 2021, the same day the 10% tax imposition by the government on our cash-out service charge begins.”

However, Lawyer Adugu has said it is wrong and illegal for the Association to carry out this proposition.

Speaking exclusively to Dennislaw News, he noted that it is important for the mobile money operators to speak to the telcos and negotiate a compromise that will let the new charges be sourced from them, instead of unilaterally imposing the new tariffs.

“When it comes to tax, we are looking at who is being taxed. So the first point of call is, is it the telcos who are being taxed or it is the end-users of the service. If it is the end-users of the service, then Mobile Money agents cannot transfer it to the end-users. It is the subscriber network which can directly charge,” he explained.

“Subscribers’ contract to such mobile money services is with the telcos so it is only the telcos who can make provisions for it [the taxes] to be transferred. Unless the association wants to make a request for the telcos to vary the charges so that it reflects in the commissions that they are earning.”

He further noted that transferring the taxes to customers will be tantamount to asking the customers to pay the taxes on their behalf, a situation that is not legally permissible

“if there is a tax on your earnings, you cannot shift the tax to the customer. Then in effect, the tax will not be on their earnings.”

Lawyer Adugu has thus urged mobile money operators to continue to negotiate with the telcos for improved communications. Customers have also been admonished to lodge complaints with the telcos when they are charged these new tariffs, as a result of the contractual agreements that exist between customers and the telecommunication companies that offer these services.

The new tariffs by the Mobile Money Association may take effect from 1st July 2021.