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Free of charge BOG exempts Mobile Money Services from VAT

Lead: “ the mobile money payment system is in its infancy and government has graciously agreed".

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Mobile money

The Bank of Ghana says it will not extend the 17.5% VAT charges to mobile money transactions. The central bank’s  move is  in response to the Chamber of Telecommunication’s plea for  mobile money services of telcos to be spared the VAT charges on non-banking financial services.

According to the Chairman of the Chamber of Telecommunication Companies, the mobile money sector which is dominated by telecommunication companies, is young, and needs to be giving some space to grow, hence their plea to the ministry of finance to spare them the VAT charges until such a time when the sector is strong enough.

Meanwhile, Head  of Banking Services and Payment Systems Oversight at the Bank of Ghana, Elly Oehne-Adu has disclosed that  “ the mobile money payment system is in its infancy and government has graciously agreed. This will help stabilize the sector and allow it the space to grow”. She said this in her address to the gathering at MTN’s Mobile Money Consultative workshop as part of the Mobile Money week celebrations.”

The Bank of Ghana, in July this year,  published two new guidelines aimed at giving the Mobile Money (MoMo) Outfits of the telecom operators some autonomy from their banking partners.

The two guidelines are the E-Money Issuer (EMI) Guidelines and the Agent Guidelines; and they form part of the road-map towards a cashless/cash-lite society.

Under the new guidelines, the mobile money outfits of the telcos would be required to go for new licenses that would make them independent financial institutions rather than just departments of the respective telcos.

That would mean, the MoMo licenses, which was hitherto issued to private commercial banks to partner with telcos, would now be issued directly to the MoMo operators and they will use the banks as just deposit agencies.

This in addition to the  exemption from VAT charges show how much premium the central bank places on Moblile Money outfits in a bid to transform financial transactions in the country.

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