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Digital inclusion and mobile sector taxation
Many of these taxes are mobile-specific in that they
are applied exclusively or at higher rates to the
mobile sector. This report distinguishes between
taxes on mobile consumers and mobile operators,
though in some cases, operators may absorb a
portion of consumer taxes or pass-through operator
taxes to consumers; such pass-through is not
considered in this study.
The main types of taxes that apply to mobile
consumers are:
• Value Added Tax (VAT) or General Sales Tax
(GST): these are taxes incurred directly by
consumers when purchasing and using a mobile
phone. These taxes are typically ‘ad valorem’ and
are expressed as a proportion of the value of the
good or service. Although they are general taxes,
mobile services sometimes attract higher value
added taxes, for example in Pakistan the VAT rate
for telecoms is up to 3.5% higher than VAT on
other goods.
• Special taxes on mobile devices: in certain
countries, handsets are still treated as luxury items
and often attract special contributions, in addition
to high custom duties. This creates significant
barriers to access for first time users and hinders
the adoption of new technologies. For example
in Gabon, on top of a 10% custom duty, each
handset is subject to a US$ 5 fixed fee, whether
it is imported or not. Other countries impose
additional VAT 18 on mobile services and devices
as well as a special tax on handsets. For example
in Argentina devices are subject to 27% VAT,
compared to the 21% standard rate, plus a 20.48%
special tax.
• Special excise taxes on mobile usage: Many
countries apply these ad valorem taxes on calls,
data and SMS, which range from 3% in Niger and
Mexico to 25% in Turkey and Jamaica; in Hungary
a fixed US$ 0.01 contribution applies on each call
minute and SMS. In Nigeria, a 2% additional VAT
is applied to data services on top of the standard
rate of 5%.
• Other mobile-specific taxes: these are
contributions such as SIM activation taxes or other
taxes on activation of connections. A number of
countries impose fixed monetary fees on the sale
of every new SIM, ranging from US$ 0.51 in Niger
to over US$ 23 in Turkey.
• Customs duties on imported handsets and
on airtime vouchers: these apply in numerous
emerging markets. These can be expressed as a
proportion of the handset value, as a fixed sum, or
as both.
18. The difference between the VAT rate applied to mobile services and the standard VAT rate is referred to as ‘additional VAT’ in what follows.
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