TURN TELECOM TAXES INTO TOOLS FOR GROWTH
3 Paths to Boost Jobs, Investment and Connectivity
24 September 2020, Kyiv -- Ukraine could make bold strides towards economic recovery, connected schools and joining the European Union, simply by lowering taxes and fees for mobile communications, according to a study released today by the GSMA.
Ukraine could create up to 14,500 jobs, boost business investment by up to $462 million and add up to 1.3 million unique subscribers, if the government reduces taxes and fees on the mobile industry to be competitive with the EU.
Improved connectivity would also enable Ukraine to deliver on its promises of greater transparency – through mobile identification software - and progress on the U.N.’s Sustainable Development Goals.
Currently, 35% of revenue for mobile operators is collected in taxes and fees, compared with an average tax burden of 21% in the EU. Faced with higher taxes and the world’s lowest average revenue per user, Ukraine’s mobile sector will struggle to achieve the connectivity necessary to deliver on the government’s goals of transparency, e-schools and rural coverage.
“Ukraine’s three operators invested almost $800 million to deploy 4G and achieved 80% coverage in the last two years. Without that connectivity, this economic recession would be worse,” said Daniel Pataki, the GSMA’s Vice President, Policy and Regulation & Head of Europe, Russia and CIS. “Yet, 40% of schools and hospitals and 92% of libraries still have no internet access. To shrink these gaps and spur economic growth, Ukraine must make the mobile industry more competitive and attractive for investors.”
The study, conducted by EY, presents three scenarios for consideration, including reducing the Radio Frequency Rent (RFR) by half during 4G network rollout, or by removing the Radio Frequency Monitoring Fees and the RFR inflation index, reducing regulatory fees and others
One scenario, allowing for VAT on international calls by travelers in Ukraine to be recovered by operators starting in 2021, merely accelerates the government’s September 2022 deadline in the EU accession plan.
Last year, the Ukrainian government and the mobile operators including, Kyivstar JSC, Lifecell and Vodafone,signed a Memorandum of Understanding to maximize coverage of 4G and 5G. The tax reforms suggested today could be a path for Ukraine to provide the industry with a predictable, growth-enhancing tax regime.
About the GSMA
The GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators and nearly 400 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organisations in adjacent industry sectors. The GSMA also produces the industry-leading MWC events held annually in Barcelona, Los Angeles and Shanghai, as well as the Mobile 360 Series of regional conferences.
For more information, please visit the GSMA corporate website at www.gsma.com. Follow the GSMA on Twitter: @GSMA.
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