2 June 2017

Tanzania: List or Quit, JPM Tells Telecom Firms

Photo: Daily News
President John Magufuli and Vice President Samia Suluhu Hassan.

President John Magufuli yesterday ordered licence revocation for mobile phone companies, which are reluctant to list on the Dar es Salaam Stock Exchange (DSE).

President Magufuli directed the Tanzania Communications Regulatory Authority (TCRA) to act tough against the stubborn companies, emphasising that all mobile phone firms should float shares on the bourse.

He issued the directive at the launch of the Electronic Revenue Collection System (e-RCS), which will be operated by Tanzania Revenue Authority (TRA) and Zanzibar Revenue Board (ZRB).

The system is designed to track and directly collect Value Added Tax (VAT) and Excise duty on all electronic transactions by communication companies and financial institutions, with the views of enhancing efficiency in the collection of government revenues.

"It is not enough to just subject the mobile phone companies to fines of 300m/- and allow them to continue minting billions of money in profits... they will not list because they are capable of paying the fines," charged Dr Magufuli.

The Electronic and Postal Communications Act of 2010 (EPOCA) requires all telecommunication companies in Tanzania to list on DSE. But, so far, only Vodacom Tanzania has adhered to the legislation and embarked on the process to float shares on the bourse through an initial public offering (IPO).

"Listing at the bourse will enhance transparency and enable the government to collect its fair share of revenues," said the Head of State.

He asked the telecommunication companies and financial institutions to join the e-RCS to allow the government to track and monitor their electronic transactions like mobile money transfers, data, voice and all payments made, electronically.

"It is an open and transparent system with no human errors, companies should join voluntarily or otherwise we will amend the law to compel mobile companies and financial institutions to join the scheme," he declared.

Adding; "In Ethiopia, they have only one mobile phone operator and it is performing well, last year it recorded 1.5 billion US dollars (over 3tri/-) profit out of between 30 and 35 million subscribers."

Dr Magufuli was of a view that since Tanzania has more subscribers, mobile phone companies ought to contribute more to the economy from the profits they generate in their lucrative business.

The President was vividly perturbed by the fact that the Tanzania Telecommunications Company Limited (TTCL) has not paid out dividends to the government since its shares were sold to the foreign investors in the 1990s.

"Before privatisation, the company used to pay 1bn/- dividends in each year and that was a lot of money at that time... why is it not paying the same after privatisation," he wondered.

Earlier, TRA Commissioner General Charles Kichere informed the President that only three companies -- Halotel, Smart and state-owned TTCL --have so far joined e-RCS, the system he described as an efficient tool for tracking and collecting revenues through electronic payments without human intervention.

The TRA boss explained further that the e-RCS was a follow-up to cargo tracking system designed in 2012, Revenue Gateway System of 2013 and the Tanzania Customs System of 2014.

"It should as well be understood that the system does not impose additional taxes to the companies and their customers," he explained. At the event, Zanzibar President Dr Ali Mohammed Shein hailed the state-of-theart system, which he said will enable the government to boost its revenues.

"Everyone must pay tax and the one collecting the revenue should be very organised since some taxpayers are fond of cheating," he stated.

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