CUTS International West Africa Director Urges Windfall Tax on Supra-Normal Profits of MTN, Other Companies
The West Africa Regional Director of CUTS International, Appiah Adomako, has advocated for the implementation of windfall taxes on the supra-normal profits of companies like MTN Ghana.
Given MTN Ghana’s designation as a Significant Market Player (SMP) by the National Communications Authority (NCA), Mr. Adomako argues that the telecom giant can charge higher prices for its products and services compared to its competitors, Telecel and AirtelTigo, potentially leading to higher profits.
This call by Mr Adomako is likely to be due to Nigeria’s recent decision to impose a 70% windfall tax on the foreign-exchange gains of banks, aimed at improving the country’s fiscal position amidst the naira’s depreciation.
Similarly, Mr. Adomako sees an opportunity for Ghana to strengthen its fiscal position by taxing the excess profits of dominant market players like MTN Ghana.
MTN Ghana reported a substantial revenue increase for the first half of 2024, reaching GHS 8.1 billion, marking a 31.1% rise from the GHS 6.1 billion recorded by June 2023.
This resulted in the company posting a profit before tax of GHS 3.3 billion, up 36.6% from GHS 2.4 billion in June 2023.
The telecommunications giant attributed this growth to a surge in data usage, mobile money services, and digital revenue.
MTN Ghana’s Q2 2024 financial statement highlighted a 55.0% year-on-year increase in data revenue, amounting to GHS 4.0 billion.
This growth was propelled by a 15.9% rise in active data subscribers and a 7.2% increase in megabytes consumed per active user per month.
Consequently, data traffic saw a 24.2% year-on-year surge. Data revenue’s contribution to total service revenue escalated from 41.5% to 49.0%.
Mobile money services significantly bolstered MTN’s revenue, with a 44.8% year-on-year increase to GHS 1.9 billion.
Digital revenue experienced a robust 59.4% year-on-year growth, reaching GHS 101.4 million. This growth was primarily driven by video, gaming, and ring-back tones.
The call for a windfall tax on supra-normal profits by the International West Africa Director is a significant move. It could have major implications for MTN and other companies, potentially influencing how they handle their profits. Thanks for sharing this important update!