Mobile telephony and taxation impact in Latin America - Key findings December 2012 - GSMA
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Mobile telephony and taxation impact in Latin America Key findings December 2012
Mobile telephony and taxation impact in Latin America
Mobile telecommunications makes a
significant socio-economic contribution,
estimated as more than USD 177 billion
Contribution across
across nine Latin American countries, nine countries:
including Brazil, Mexico, Argentina,
Colombia, Chile, Peru, Ecuador, Uruguay USD 177 billion
and Panama. However, high taxation contribution to GDP
on mobile consumers and operators has
a damaging impact on this potential. 890,000 FTE
Lowering the taxation levels could employment created
benefit consumers, businesses and
governments by encouraging take-up
and use of new services (e.g. mobile
Mobile operators and the wider
broadband and Machine-to-Machine
ecosystem make direct contributions to
(M2M)), improving productivity and
a country’s GDP.
boosting Gross Domestic Product (GDP)
and tax revenues. Further economic benefits are also
created through productivity gain
and intangible benefits. Despite these
High sector-specific taxation
widely acknowledged advantages, in
is hindering the mobile
some Latin American countries mobile
telecoms potential consumers face special communication
Take-up of mobile services has taxes and operators are also burdened
increased rapidly in the last 10 years by numerous taxes and fees. These
across Latin America. The majority punitive sector-specific taxes are
of the population in each country distortionary and counterproductive
now has access to mobile telephony to the digital economy and growth
compared to less than 20% in 2000. The agenda. Policymakers and governments
take-up of 2G is significant and there are beginning to recognise the potential
is substantial scope for development of the mobile industry and the harmful
of 3G and 4G services. The mobile impact of excessive taxes.
telecommunications industry generates
significant economic and social benefits.
1Impact
as
a
%
of
GDP
Ecuador Argentina Panama Brazil
Supply
side 2.440% 1.766% 1.087% 2.224%
Productivity 3.124% 2.501% 3.154% 1.729%
Total 5.564% 4.267% 4.242% 3.952%
“ We have a very high taxation
for the sector…. We are working 6%
to improve the tax load for the 5%
industry... I think, if we lower
4%
3%
taxes, the market will not grow 2%
over 130% as in the past 1%
15 months, it will grow 250%.” 0%
Mr Paulo Bernardo Productivity Supply side
Brazilian Communications Minister
(as quoted in newspapers, May 2012) Figure 1: Total economic impact of mobile
ecosystem as a proportion of GDP, 2011
Mobile telecommunications telecommunication services across Latin
creates significant socio- America also creates spill-over effects in
economic benefits the wider economy through improving
the productivity of employees and
The Latin American mobile generating social benefits for citizens.
telecommunications industry The productivity gain boosted the total
generates significant economic economic contribution to USD 177
benefits through effects on the supply billion in 2011.
side of the economy, employment
creation, productivity improvement In 2011, mobile operators in the
and intangible benefits gained by nine countries employed 107,000
consumers. In 2011, mobile operators Full Time Equivalents (FTEs) across
were estimated to have provided a the operations. More than 890,000
direct contribution of USD 27.7 billion employment opportunities were created
to the nine Latin American economies through support services such as
through wages, dividends, taxes airtime sellers and supply of support
and other corporate activities. The services to operators.
broader impact through payments to
the mobile ecosystem and the wider
economy made the total supply side
contribution at more than USD 84
billion in 2011. The spread of mobile
2Taxing mobile services as a in Latin America) and in Argentina,
luxury item is detrimental to could represent up to 60% of the price.
building a digital economy Sector-specific taxes are discriminatory
Despite the positive impact of mobile and distortionary. Mobile-specific
telecoms, consumers and operators taxes send negative signals on
in Latin America suffer from taxation consumption as demonstrated by
regimes which impose a significant the lower use of mobile services in
burden on them. In particular, there countries with relatively high taxation.
are a number of cases where mobile Deliberating higher taxes on handsets
telephony is taxed more heavily than risks disconnecting the citizens from
other sectors of the economy. the connected economy. While 3G
coverage is offered by mobile operators
Among the countries surveyed, to vast majority of the population
mobile consumers in Brazil face the across Latin America, take-up is low
highest levels of consumption tax, highlighting the detrimental effect of
accounting for more than 1/3 of handset and usage taxes.
mobile service charges.
Operators also face other sector-
Mobile telecoms services in Brazil are specific taxes, including turnover
subject to a higher sales tax (ICMS) taxes, license fees, universal service
rate. This rate varies from 25% to 35% fund levies and other regulatory
across the states and is considerably fees. These numerous charges reduce
higher than the standard ICMS levied operators’ profitability and discourage
on other goods, which averages at 17%. investments by sending the wrong
This is also the case in Colombia where signals about the return on the large
the VAT on mobile services is 20%, 4% fixed investments required to build and
higher than the standard rate. Mobile upgrade networks.
specific taxes such as higher VAT,
Mexico’s IEPS, Argentina’s excise tax
(“impuestos internos”) and Panama’s
ISC discourage usage and raise the
entry barriers for low income segments.
Handsets are also subject to hefty
import duties (in addition to sales taxes
3Mobile telephony and taxation impact in Latin America Key findings
12%
10% Tax Rate
10%
8%
Corporation tax 35% of profits
6% 5%
4.17% 4%
4% 3% Stamp duty 1% of revenues
2%
0% 0% 0% 0%
0% 5.2% on revenues
from calls and SMS
4.06% on revenues
Figure 2: Additional taxation rates on Turnover tax from data usage
consumption of mobile services. 2011
3.7% of revenues
from SIM cards and
70%
handsets
60%
50%
2.55 pesos for each
40%
30% Tasa derechos post pay customer
20% radioelectricos 3.57% of revenues
10%
0%
from pre pay users
USF + Tasa de
Control, Fiscalización y 1.5% of revenues
Figure 3: Tax as a percentage of handset cost, Verificacion
2011
Table 1: Taxes on Argentine mobile operators
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Figure 4: Total Cost of Mobile Ownership as a
proportion of GDP per capita
4Lowering the taxation burden 2011
could benefit consumers, 2008
businesses and governments 0 50 100 150 (MOU)
Ecuador (usage tax abolished in 2008)
Several studies have shown a
positive relationship between mobile 2011
service take-up and an increase in 2007
GDP per capita. 0 50 100 150 (MOU)
Uruguay (usage tax abolished in 2007)
Some countries across the region are
beginning to recognise the benefits Figure 5: Impact on minutes of use (MOU) per
of lowering taxes and are starting to user per month of tax reductions in Uruguay
and Ecuador
remove this distortion. Until 2008,
Ecuadorian mobile consumers were
subject to a 15% telecommunications In countries such as Brazil where
excise tax that applied on mobile usage mobile taxation has been characterised
and subscriptions in addition to a as excessive, lowering the taxes has
12% VAT. This luxury tax, at the time, the potential to provide numerous
was amongst the highest in the world. benefits. For example, if an ICMS tax
Mobile phone take-up and use, and reduction of 17%, matching the rate that
the supply side’s share of GDP have applies to standard services, led to use
increased since the tax was abolished. in Brazil increasing to the average level
of Ecuador and Uruguay (138 MOU),
Conversely, in Mexico and Panama, the government would have gained
mobile take-up and use has been an extra BRL 1.4 billion in 2011 from
negatively impacted where mobile- widening the usage base alone. There
specific taxation has recently increased. will be further tax receipts from the
economic activities created in the wider
economy. Brazil is recognising this
positive impact of lower taxes and
has recently reduced the taxation
burden on M2M communications.
5Mobile telephony and taxation impact in Latin America Key findings
Similarly, Panama has announced that
it will remove the discriminatory higher In addition to the increased GDP
corporation tax on mobile operators contribution and generation of
from 2014. socio-economic benefits, it could
Higher taxes discourage consumption also add to the government tax
and investment in the mobile sector and receipts. The growth in mobile
reduce the socio-economic benefits. A service consumption that results
reduction in taxation levels can have a from lowering of the taxation
positive impact on the economy, society levels can compensate for the
and government tax receipts. initial loss in tax receipts.
6Download the full report at: www.gsma.com/publicpolicy/tax For more information, please contact: Sebastian Cabello Mani Manimohan Director, GSMA Latin America Public Policy Director, GSMA scabello@gsm.org mmanimohan@gsm.org GSMA Head Office Seventh Floor, 5 New Street Square, New Fetter Lane, London, EC4A 3BF, United Kingdom Tel: +44 (0)207 356 0600 www.gsma.com/publicpolicy/tax ©GSMA 2012
You can also read
