Taxing telecommunication/ict services: an overview

Transcription

1 Committed Comprometida to Connecting para conectar the el World mundo Regional Seminar on Costs and Tariffs for Asia and Pacific Study Group 3 Regional Group SG3RG-LAC Tokyo, Japan, 8-10 April 2013 Taxing telecommunication/ict services: an overview Carmen Prado-Wagner Regulatory and Market Environment Division (RME) Telecommunication Development Bureau (BDT)

2 The ITU developed a study on taxation of telecommunication / ICT. This study was prepared in collaboration with Professor Martin Cave from London School of Economics and Dr. Windfred Mfuh from Warwick University This will be available soon on the Regulatory and Market Environment website: 2

3 Content A taxonomy of telecommunications/ict taxes The impact of telecommunications/ict taxation: macro effects Some conclusions Some recommendations 3

4 A taxonomy of telecommunications/ict taxes Many countries have a specific ad valorem (percentage) tax on telecommunication bills. There are lots of options here: mobile, fixed, or both sorts of bill that can be targeted; particular components of the bill could be targeted, such as a monthly charge, or calls (perhaps of a particular type). These options will have different effects. 4

5 For example 1) A fixed charge tax per time period can be imposed on a bill. This might be so much per month on post-pay mobile contracts. 2) A specific tax on handsets. 3) Sector-specific taxes on devices such as computers, tablets, or game consoles. 4) Taxes on wholesale telecommunication services, notably on the termination of incoming international calls. 5) Customs taxes on the import of devices or telecommunication equipment more generally, such as switches or antennae. 6) Tax or excessive charges for spectrum. 7) Etc. etc. 5

6 Choosing what to tax involves a range of considerations of which the following are of particular interest: The effect on income distribution Taxes are levied to finance public sector non-marketed services The cost of collection tax avoidance, illegal tax evasion, cross-border activities, etc. The incidence of the tax who pays the taxes? 6

7 The impact of telecommunications/ict taxation: macro effects One of the most interesting and important aspects of this debate concerns a feedback mechanism which is widely considered to be particularly important in application to telecommunications/ict. The feedback works as follows: A government levies a tax on telecommunications. As a result, the roll-out of services is delayed. This has a direct effect on national income, which includes telecommunication/ict output. However, there is also a spill-over effect. This arises because telecommunication/ict services are used in many other sectors, and can increase productivity there. Accordingly, the tax has a broader effect on the growth of national income, and hence on future tax revenues from other sectors. 7

8 Direct effect: Directly impact on the national income Application of a new Tax for a specific product or service Possible slowdown consumption of this service in the market Cumulative effect: Possible negative impact on the productivity in other national sectors This can affect the future income from other sectors 8

9 Telecommunications support all other sectors of the national economy 9

10 Some conclusions As the environment of telecommunications / ICT is changing every day, the variety of options to tax is also growing Many tax administrations are working to reduce or eliminate completely some industry-specific taxes that have a negative impact on the penetration and use of services Double taxation must be considered a priority by the governments. It is important to take in to consideration article 6 of ITR: 6.3 Where, in accordance with the national law of a country, a fiscal tax is levied on collection charges for international telecommunication services, this tax shall normally be collected only in respect of international services billed to customers in that country, unless other arrangements are made to meet special circumstances. 10

11 Some recommendations It is not easy to balance the taxation process of a country, this should be analysed on a case by case basis But governments should think carefully before imposing special or new taxes on the telecommunications sector. This should be done only when there is no alternative to raise tax revenue, which would be less damaging to the economy in terms of market distortions and negative impacts on economic growth For the telecommunications industry to maximize benefits as a source of growth, tax authorities, regulators and operators need to work together! 11

12 Thank you! Regulatory and Market Environment Division (RME) Telecommunication Development Bureau (BDT 12