This document summarizes the key findings of a report on global mobile tax regimes. The report finds that reducing mobile-specific taxes can substantially increase mobile penetration and usage. A 10% increase in mobile penetration is estimated to lead to a 1.2% increase in annual GDP growth for developing countries. Sixteen countries still levy higher taxes on mobile services than other parts of the economy. The report recommends that governments consider lowering mobile taxes to treat mobile as a basic need rather than a luxury, which could boost economic growth while maintaining tax revenues. Case studies from Kenya suggest reducing mobile taxes there could increase usage, penetration, and operator revenues in the long-run while having a neutral or positive impact on total government tax receipts.

1. Global Mobile Tax Review
2006–2007
Tax regimes that recognise mobile phones
as a need not a luxury benefit all stakeholders
Executive Summary

2. Introduction
The impact that mobile communications is having on economic and social development,
particularly in the developing world, is akin to that of other major enabling infrastructure like
roads, ports and railways. All stimulate trade, create jobs, generate wealth and enhance social
welfare. Mobile communications, in particular, is making a profound impact by:
i. Delivering universal access, currently covering 80% of the Despite the positive impact of mobile communications, this study
world’s population – double the coverage rate in 2000. By 2010 has shown that 16 governments have taxation systems which levy
mobile communications will bring affordable voice, data and higher taxes on mobile communications than the economy as a
internet services to more than 5 billion people, reaching 90% whole. The findings of this report suggest that such taxation
of the world’s population;1 and structures increase mobile prices, preventing less well off
consumers from connecting to mobile networks and reducing
ii. Delivering universal services, with 2.7 billion people connected
the usage of those that do. This report suggests that by removing
to mobile networks versus 1 billion to fixed. In Africa the
mobile specific taxes more consumers will connect, boosting
number of mobile phone subscribers overtook the number
economic growth, at very limited cost to total government tax
of fixed lines in 2001. Today, mobile connections in Kenya
receipts. In some cases long-term government tax receipts may
outnumber fixed lines by 18 to 1 and in Tanzania by 32 to 1.
even be positive.
This report by the GSMA builds on the 2005 GSMA report,
Tax and the Digital Divide, and extends the benchmark of taxes
levied on the ownership and use of mobile phones to 101 countries,
representing about 85% of the global population. This latest report
analyses the impact of reducing/removing consumer taxes on
mobile services through considering the impact of tax changes on:
• A reduction in the price charged to the end customer;
• The impact this change will have on mobile penetration
and usage; and
• The subsequent impact on tax revenues and GDP. From a
sample of 57 developing countries, the report finds that a 10%
increase in mobile penetration leads to a 1.2% increase in the
annual growth rate in GDP. 2
Mobile phones are revolutionising the lives of millions of
people and will continue to be the primary means for the great
majority to access voice, data and internet services. This report
makes the case for addressing taxation policy and levels to
1 GSM Association, Universal Access, How Mobile Can Bring Communications support the extension of this essential franchise to the poorer
to all, 2006. sections of society.
2 Following Waverman et al. (2005) a growth model following the Endogenous
Growth approach is applied. This is a cross-section estimation of the relation
between average GDP per capita growth over a period of time (1980 to 2003
in our case, as in Waverman at al. (2005)) and the initial level of GDP per
capita, literacy rate at the beginning of the period as proxy for initial human
capital, average investment as a proportion of GDP and average mobile
phone penetration.
GDPpercapGrowth1980-2003 =α + β1MobPen1996-2003 + β2GDPpercap1980 + β3I + β4Literacy1980
01

3. Global Mobile Tax Review 2006–2007
Executive summary
Key findings Key recommendations
Based on analysis and modelling the following key findings Mobile specific taxes, levied in addition to VAT, discourage
can be drawn: the take up and usage of mobile communications. Taxation is,
therefore, clearly a critical issue for consideration in spreading
• Reducing mobile specific taxes and general consumer
the use of mobile to poorer sections of the world.
taxes such as VAT leads to substantial increases in mobile
Telecommunications and finance policy makers, in collaboration
penetration and usage;
with the mobile industry, should examine in detail the effect of
• Increased penetration boosts economic activity. In developing taxation in their respective jurisdictions. Key considerations
countries a 10% increase in penetration leads to a 1.2% increase should include whether mobile should be taxed in a different
in the annual growth rate in GDP; manner from the remainder of an economy, i.e. treating mobile
communications as a basic need and not as a luxury.
• Turkey levies the highest taxes on mobile consumers in our
sample set, totalling 44% of each $ spent by consumers. This In the case of mobile specific taxes, analysis should focus on
position is consistent with the last GSMA report on this issue; the impact of gradually lowering as well as restructuring tax
regimes to increase the affordability of mobile services. In many
• Taxation of mobile consumers in East Africa is almost twice the
jurisdictions it appears possible to create net positive effects for
17.4% global average, potentially limiting mobile expansion in
government, industry and consumers.
the region and the associated benefits;
• 20 jurisdictions levy higher taxes on mobile consumers
than fixed;
• A reduction in mobile specific taxation could approach revenue Case study: Impact of reducing mobile
specific taxes in Kenya
neutrality in 14 of these 16 countries, as reductions
in government taxation revenue would be counterbalanced
by greater VAT, corporation tax and economic growth; A mobile specific tax of 10% is applied to usage in Kenya.
• Case study evidence from Kenya suggests that cutting mobile A forthcoming GSMA study has estimated that if this tax was
specific taxes can have a revenue positive impact for the halved to 5% in 2007, within 10 years this change will increase:
government in the medium term in countries where mobile • Usage by 7%;
penetration is still low;
• Penetration by 5%; and
• Of the countries surveyed, 16 still have mobile specific taxes.
Such taxes are regressive in developing countries, in that they • Operator revenues by 8%.
are proportionally greater on the poorer members of society Though total taxation revenues (including corporation tax
who use mobile phones as their source of universal access; and and regulatory fees) from the mobile operators would fall
• On average, tax accounts for 24.8% of total handset costs and slightly over the period, the multiplier impact of the economic
45 countries (nearly half of those surveyed) impose specific growth that would be stimulated leads to a net increase in
import duties on handsets. government tax revenues. As demand for mobile services
increases this leads to greater employment and investment
by the mobile operator.
If excise duties were halved the GSMA estimates that the net
impact on the level of government tax receipts from mobile
operators, including the associated growth in the economy,
would be between 2-4% higher in the period to 2011.
02

4. Global Mobile Tax Review 2006–2007
Executive summary
Tax as a total share of cost of mobile ownership Source: Deloitte 2006
Turkey
Tanzania
Uganda
Brazil
Ukraine
Zambia
Dominican Republic
Ecuador
Greece
Argentina
Kenya
Denmark
Sweden
Mozambique
Nepal
Italy
Zimbabwe
Finland
Poland
Cameroon
Senegal
Chad
Rwanda
Portugal
Ireland
Dem Rep. Congo
Morocco
Colombia
Slovenia
Uzbekistan
Hungary
Austria
Bulgaria
Gambia The
France
Azerbaijan
Georgia
Chile
Peru
Burkina Faso
Jordan
Guinea
Romania
Albania
Czech Republic
Slovakia
Gabon
The Netherlands
Cote d'Ivoire
Russian Federation
Lithuania
Latvia
Malta
Estonia
Madagascar
Tunisia
United Kingdom
Ghana
AVERAGE
Thailand
Trinidad and Tobago
Mexico
Spain
Ethiopia
Germany
Bangladesh
Pakistan
Venezuela RB
Mauritius
Nicaragua
Luxembourg
Kazakhstan
Guinea-Bissau
Sri Lanka
Cyprus
Egypt Arab Rep.
South Africa
Samoa
Mauritania
Bolivia
Cambodia
Guatemala
India
Philippines
Indonesia
Iran Islamic Rep.
Lao PDR
Vietnam
Botswana
Paraguay
Yemen
Sierra Leone
Papua New Guinea
Lesotho
Angola
Nigeria
Syrian Arab Republic
Malaysia
China
Bhutan
Myanmar
Swaziland
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
03 Percentage

5. Global Mobile Tax Review 2006–2007
Executive summary
Tax as a percentage of handset cost Source: Deloitte analysis based on Tarifica, Wireless Intelligence and Deloitte tax data
Syrian Arab Republic
Iran Islamic Rep.
Cameroon
Rwanda
Chad
Brazil
Tanzania
Mexico
Mozambique
Trinidad and Tobago
Bhutan
Argentina
Ghana
Senegal
Gambia The
Turkey
Azerbaijan
Dem Rep. Congo
Samoa
Guinea
Burkina Faso
Georgia
China
Venezuela RB
Uganda
Gabon
Cote d'Ivoire
Ethiopia
Cambodia
Chile
Sweden
Denmark
Bolivia
AVERAGE
Russian Federation
Peru
Zambia
South Africa
Morocco
Zimbabwe
Finland
Poland
Lesotho
Colombia
Portugal
Ireland
Myanmar
Lao PDR
Bangladesh
Italy
Austria
Uzbekistan
Ukraine
Slovenia
Hungary
Bulgaria
Albania
France
The Netherlands
Greece
Slovakia
Romania
Czech Republic
Vietnam
Indonesia
Madagascar
Tunisia
Malta
Lithuania
Latvia
Handset taxes
Estonia
Botswana
United Kingdom
Kenya
The jurisdictions with the highest tax, as a proportion of total
Spain
Germany
handset cost, are Syria, Iran, Cameroon, Chad and Rwanda:
Nigeria
Angola
Mauritius
• Syria charges an average $24 in taxes, on top of 20% VAT
Guinea-Bissau
and 10% customs duty;
Nicaragua
Luxembourg
Kazakhstan
• Iran’s customs duties are 60%, by far the highest duties on
Cyprus
Sri Lanka
mobile handsets within the sample of countries studied; and
Nepal
Swaziland
• Cameroon has also some of the highest custom duty
Mauritania
Paraguay
charges, 32%, which are levied in addition to 19% VAT.
Yemen
Guatemala
Ecuador
Philippines
Sierra Leone
Egypt Arab Rep.
Papua New Guinea
Malaysia
Thailand
India
Jordan
Dominican Republic
Pakistan
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage 04

6. Global Mobile Tax Review 2006–2007
Executive summary
Telecommunication specific taxes
Telecommunications specific taxes
Country Connection Subscription Handset
Albania Post pay $59/Prepay $7/Fixed $146:
registration and subscription
charges
Bangladesh $11.76 Paid at subscription: mobile $3 Fixed charge on import of mobile
and fixed and fixed handsets
Dominican 2% Communications development
Republic tax – paid on usage and
subscription on mobile only
Greece $1.92-$5.75 Subscriber’s special
duty. Varies based on the monthly
invoice total
Iran Fixed charges at subscription of:
$4.44 for pre-pay/$135 for post-paid
/$0.33 on fixed line. This includes
subscription tax for pre-pay
/post-paid and fixed line and a
Rural Areas Development tax for
post-paid
Italy $6.82 Mobile specific stamp duty
on bills issued. Applies only on
post-paid services
Jordan 4% special VAT due on
telecoms services: charged on
mobile and fixed
Kenya 10% Telecommunications Tax on
usage: fixed and mobile
Nepal 10% Telephone services charges – $20.15 Telephone ownership fee:
paid on usage only. Not applicable fixed and mobile
to subscription and applies to both
mobile and fixed
Pakistan $8.30 Fixed activation charges:
mobile only
Sri Lanka 2.5% Mobile Subscription Levy paid
on total value of monthly charges:
mobile and fixed
Tanzania 7% Telecommunications Tax on
usage: fixed and mobile
Tunisia 5% Telecom Royalties: mobile 5% Telecoms Royalties: calculated
and fixed on cost of handset plus VAT
Turkey Fixed Taxes at subscription: $23.86 5% Special communication tax – on
Wireless usage and new subscription overall usage and fees for mobile
special communication tax (mobile phones. Fixed telephony has a 15%
telephony only) rate of Special communication tax
Uganda 12% Telecommunications Tax on
usage: fixed and mobile
Venezuela $1.56-$6.25 Subscription Tax on
mobiles and fixed
Source: Deloitte 2006
05

7. Global Mobile Tax Review 2006–2007
Executive summary
Countries with differing taxation regimes
Mobile consumers pay higher taxes for fixed and mobile telephony
than fixed Tax regime: fixed vs mobile
20 markets demonstrated lower taxes on fixed telephony,
the key differences being: Country
• A lower VAT rate or no VAT rate on fixed telephony services
e.g. Senegal, Mauritania and Pakistan; Albania Higher usage taxes on mobile than fixed
• Lower ‘other taxes’ levied on fixed telephony, such as lower, Argentina 4% excise tax charged on mobile but
or no, excise tax due on services e.g. Thailand, Kenya, not fixed
Tanzania, Uganda, Zambia and Argentina; and Colombia 20% VAT on mobile, 16% on fixed
• Different levels of subscription/connection charges Dominican Republic No tax on fixed, 22% tax on mobile
e.g. Albania.
Egypt 15% sales tax on mobile, 5% on fixed
Iran Higher subscription tax on mobile
than fixed
Kenya 10% excise tax on mobile but
not on fixed
Mauritania 14% VAT on mobile but not on fixed
Nigeria 5% tax on mobile connections, no charge
on fixed
Pakistan Activation taxes on mobile but
not on fixed
Senegal 18% VAT on mobile none on fixed
Syria 3% consumption and expenditure tax
on mobile, 2% on fixed
Tanzania 7% excise duty on mobile, none on fixed
Thailand 10% excise duty on mobile but only 2%
on fixed
Turkey Only 15% tax on both subscription and
consumption for fixed, but 25% tax for
both for mobile. There is also a new
special subscription communication tax
at a fixed rate on mobile, but not on
fixed telephony
Uganda 12% excise duty on mobile, 5% on fixed
Ukraine 7.5% pension fund charge on mobile,
none on fixed
Zambia 10% duty on mobile but none on fixed
Source: Deloitte 2006
06

8. Global Mobile Tax Review 2006–2007
Executive summary
Percentage increase in subscribers by 2010, following a 10%
reduction in the level of telecoms specific taxes
Kenya
Uganda
Tanzania
Tunisia
Jordan
Iran Islamic Rep.
Venezuela RB
Dominican Republic
Italy
Greece
Turkey
Albania
Sri Lanka
Pakistan
Nepal
Bangladesh
0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% 1.0%
Change relative to base forecasts
Source: Deloitte 2006
07

9. Global Mobile Tax Review 2006–2007
Executive summary
Percentage increase in subscribers by 2010, following a 10% Percentage increase in minutes of use by 2010, following a 10%
reduction in the value of VAT on usage and handset sales reduction in the value of VAT on usage
1.0% 1.5%
0.8% 1.2%
Change compared to base forecast
Change compared to base forecast
0.6% 0.9%
0.4% 0.6%
0.2% 0.3%
0.0% 0.0%
Maghreb and ME
Sub-saharan Africa
Asia Pacific
CEE,CIS,Russia
Latin America
EU15
Maghreb and ME
Sub-saharan Africa
Asia Pacific
CEE,CIS,Russia
Latin America
EU15
Source: Deloitte 2006 Source: Deloitte 2006
08

10. Global Mobile Tax Review 2006–2007
Executive summary
World Bank and
United Nations perspective
Consumers, particularly in developing countries, are price sensitive in relation to the uptake
and usage of mobile phones. Taxation levels and regulatory fees, are a key variable impacting
upon the total cost of mobile ownership and use.
“Mohsen A. Khalil – Director, Global
Information and Communication
Technologies, World Bank
“The World Bank is in a position where we can act as a With this in mind, one of the main objectives for us is to think
facilitator in dialogue – an ‘honest broker.’ In our policy and about how to provide access to the poor and how we can provide
investment work, we are primarily concerned with the social telecommunications services at affordable cost to the masses of
and economic interest accrued to the country as a whole. the 6 billion world population instead of just the next billion. We
Social responsibility, poverty reduction and economic growth believe that any taxation policy should be designed in a way that
are the primary drivers for our policy considerations. does not add any further barriers to access or add to the cost of
service provision for the poor, and should not deter or undermine
“Generally speaking, for any policy to be sustainable –
competitive market forces. Another important objective is that
for example, taxation – it has to balance the interests
taxation policies should ensure that the sector is always managed
of all stakeholders. That would mean governments,
in a way that will achieve a level playing field and will allow
operators, investors/financiers, consumers and civil society
equal distribution of services to all users of the population.
at large. Taxation has a large impact on access to mobile
communications. We have factual data that demonstrates We do not believe that taxation should be designed on the basis
the direct link between connectivity and economic growth, of short-term considerations – it should be designed on the basis
so achieving access at affordable prices to the broadest base of achieving the best long-term economic interests for the society
of the population is essential to driving economic growth and in a way that accelerates the extension of services to the poor.
and alleviating poverty. The indirect benefits to the economy of having affordable access
to telecommunications services far outweigh any short-term
“
benefit to the budget.”
The rate of other taxes applied to mobile consumers can differ
from other similar consumer goods. For example, excise duty in
Turkey is levied at 6.7% for most electrical based consumer goods
such as refrigerators and record players, whilst mobile phones
are treated as a luxury goods and the consumer must pay 20%
in tax, the same rate levied on furs, caviar and precious stones.
Such discrepancies tended to relate to a world where mobile
phones were indeed a luxury, rather than today’s situation where
it is often the only means of communication available.
09

11. Global Mobile Tax Review 2006–2007
Executive summary
“Amir A. Dossal, Executive Director, United
Nations Fund for International Partnerships
(UNFIP)
“Allowing easy access to timely and reliable information at The cost of owning and using a mobile phone could still be
low cost, mobile communications offers a real opportunity reduced by governments and regulators, by, for instance:
to bridge the digital divide. Information and Communication
• Rationalisation of international and national policies and
Technology (ICT) is a key tool for the achievement of the
regulations applicable to communications;
Millennium Development Goals – mobile communication can
deliver affordable voice, data and internet services to billions • Adoption of policies that attract international operators to
of people (it is estimated that more than 5 billion people will enter new national markets with minimal entry procedures
have access to mobile communications by 2015 – double the and costs, and encourage manufacturers to rationalise
number connected today). Bringing the benefits of mobile production with lower costs; and
communications to those areas previously out of reach is
• Adoption of policies that reduce entry barriers to small but
crucial for development. Affordability is a key element to
innovative entrepreneurs, and encourage risk-taking for new
achieving broad access to mobile technologies among the less
entrants in national markets.
affluent. Considering that over one billion people still live on
less than $1 a day, to ensure access to information for all, the Governments, of course, could reduce barriers to entry by
total cost of owning and using a mobile phone clearly needs streamlining regulatory and taxing policies, which would have
to be decreased significantly. a positive effect in increasing competition as well as reducing
initial investment and operating costs – with powerful forces
tending to reduce the price to the consumer. In principle, these
measures should be of benefit to the broader economy and to
entrepreneurial risk-taking and growth industries in particular,
as this approach would tend to boost personal income and
demand for services.”
10

12. Global Mobile Tax Review 2006–2007
Executive summary
Methodology
Deloitte collected tax data through its’ international office network and constructed an
economic model using Deloitte tax data, information from third party providers and
assumptions verified by a major international telecoms provider. Deloitte also analysed
potential impact of changes in taxation using this model. The overall modelling approach
adopted for this report is set out diagrammatically below.3
Approach to modelling the impact of taxation changes
Impact of tax
change on
Country company revenues
Impact of tax
characteristics
change on mobile
penetration
Tax rates Corporation
General Regression tax licence fees
Telecom
GST
Handset
Demand Impact of tax
equations Impact on
Mobile prices change on mobile government tax
(penetration and usage (minutes
usage) revenues
and texts) Tax on
mobile
services
Current prices
Additional
tax revenues
Impact of tax
change on
demand for new
handsets
Impact on GDP
The model was estimated at the jurisdiction level for The level of increase in subscribers relative to the base case in each
101 jurisdictions across the world and then aggregated for jurisdiction reflects both the nature and size of the mobile specific
presentational purposes. In order to compare the impact tax, the development of each jurisdictions mobile industry and
of various tax changes: economy and the different levels of price elasticity of demand.
In addition to these impacts on the level of penetration, removing
• A base case scenario was created for all 101 jurisdictions,
telecommunications specific taxes also increases minutes of use
which projects for 5 years market development and tax
and sales of handsets.
revenue collection, assuming application of the current
taxation structure. External market projections and an The reduction in mobile specific taxation approaches revenue
econometric model are used to forecast penetration rates, neutrality in 14 of the 16 countries, as direct reductions in
population, usage and handset sales; and Government taxation revenue is counterbalanced by greater
VAT, corporation tax and growth across the economy.
• All changes in penetration, handset sales, usage and
Government tax revenue collection are compared to a base
case scenario.
The model estimates that reducing mobile specific taxes to 90%
3 The economic modelling conducted as part of this project relies on a number
of their current level would significantly increase penetration of assumptions as to the development of markets, population levels and the
over and above the base case estimates by 2010. continuation of existing economic relationships. As with all such models the
results should therefore be regarded as indicative rather than definitive.
11

13. Global Mobile Tax Review 2006–2007
Executive summary
Percentage change in government revenues from base case in 2010
following a 10% reduction in the level of telecoms specific taxes
Kenya
Uganda
Tanzania
Tunisia
Jordan
Iran Islamic Rep.
Venezuela RB
Dominican Republic
Italy
Greece
Turkey
Albania
Sri Lanka
Pakistan
Nepal
Bangladesh
-2.0% -1.6% -1.2% -0.8% -0.4% 0.0%
Change relative to base forecasts
Source: Deloitte 2006
The larger negative result for Greece is explained by limited
impact on penetration in a saturated market. The result for Turkey
reflects its high reliance on mobile specific taxation relative to
other countries. This results in an inability of the other economy
wide taxes to compensate for the loss of direct taxation income.
In a simple static analysis this could be argued to make the case
against tax reform. However, a more dynamic analysis would
need to consider whether such a system provides the correct
signals and incentives for investment in the sector and across
the economy as a whole.
It is also important to note that these results underestimate the
additional impact of increased mobile operation on the remainder
of the economy through local economic multipliers.
These findings confirm the views of many well known
international mobile operators.
12

14. Global Mobile Tax Review 2006–2007
Executive summary
“Neil Gough, Director of
International Policy, Vodafone
“As a mobile operator with broad international experience, imposed on mobile services than fixed line services. This creates
Vodafone is concerned that some emerging markets may in fact distortions in competition between fixed and mobile services
be implementing taxation policy in ways which harm their own which can have a very serious negative effect on the market.
long-term interests. They often impose high, distortionary and For example, one particular tax in Turkey is levied at a rate
regressive taxes. These reduce penetration and usage rates, reduce of 25% for mobile operators and 15% for fixed operators.
the economic growth which the mobile industry could otherwise That is a differential that is not insignificant, and which reduces
bring, and impose an unfair tax burden on poorer users. the ability of mobile operators to drive competition between
fixed and mobile services – something that governments tell
“There are a number of options that governments should
us they want as much as economic growth.
consider as a matter of urgency which address these negative
effects, but still ensure the government can collect taxes. These There is no question that the level of taxation in Turkey is
options don’t need to involve sudden or drastic reductions in extraordinarily high, and even more problematically, the way in
tax revenues; they can instead involve a gradual restructuring which taxes are levied is regressive with high upfront fixed taxes
of taxes that allows a similar amount of tax to be collected, but imposed on SIM cards and joining a network. It is no accident
ensure it is collected in a fairer and more efficient way. that usage rates in Turkey are amongst the lowest in the world,
and that mobile penetration rates are still some way short of
“I should say that we understand why emerging market
rates in comparable markets such as Eastern Europe.
governments have been tempted to levy high taxes on the
mobile market. When mobile was first introduced in emerging Some countries – for example, India – have moved in the right
markets, mobile was considered to be a ‘luxury good’. Back direction by removing some of the licence and spectrum fees
then mobile actually wasn’t such a bad thing to tax because it imposed on the mobile sector. They have deliberately done this
genuinely was a luxury good available only to a few – it was to enhance the affordability of services and help increase
the emerging market equivalent of yachts or caviar. penetration, which is one of their explicit policy objectives.
“The problem is that when you roll the clock forward ten So, you need to examine not only the overall levels of tax but
years, mobile is simply no longer a luxury good: it is the how they are actually structured. For a country looking to
main communications service and a key enabler of economic increase mobile penetration and benefit from the social and
development and social cohesion in emerging markets. economic impact of mobile communications, applying handset
We have to recognise the legacy of why we ended up in this levies is clearly not a sensible policy. Indeed, this is usually
position, recognise that those reasons are simply no longer ineffective because it only drives imports into the black market.
valid. We need to move away from taxing mobile as a luxury There are plenty of options that governments should seriously
good before emerging markets seriously hinder their prospects consider. I must stress that we are not suggesting that they need
for economic growth. to immediately reduce taxes to zero. There are invariably
opportunities for governments to restructure taxes so that they
“In some of our markets, for example, Turkey, not only is there
continue to collect a similar absolute amount of tax from the
a high degree of taxation of communications services, but taxes
communications sector, but do it in a much more efficient way.”
are applied in a discriminatory manner: a higher rate is
13

15. Global Mobile Tax Review 2006–2007
Executive summary
Conclusion
At the World Summit on the Information Society in 2003, 175 countries signed up to a
commitment to give more than half the world’s population access to information and
communications technologies by 2015. Within four years market competition and private
investment has delivered this goal. The mobile industry provides access to more than
80% of the world population and, by the end of 2007, 3 billion people will be connected.
The World Bank maintains that whereas the first 3 billion connections will be market driven
the next 3 billion will be policy driven. One key policy tool that has an immediate impact
on affordability is the level of taxation and this presents the potential to increase the mobile
franchise to poorer sections of society and to receiving the socio-economic benefits that result.
“ChrisWilliams – Partner, Economic
Consulting, Deloitte & Touche LLP
“This study identifies a series of key findings that Governments Whilst global mobile penetration level now stands at 40% there
need to take account of in developing their taxation and remain large differences in penetration between developed
economic policy: countries and many developing countries, where despite fast
“• Taxes are significantly higher in many developing countries growth rates penetration is below 25%. More needs to be done
than those observed in many developed countries and 16 to increase these low rates, particularly in those countries where
countries levy telecom specific taxes on top of standard sales mobile, as opposed to fixed line, is the main source universal
and import taxes on mobile phone users; access. In the light of the results of this study, Governments
may consider the impact of their tax policies on the growth
“• Reducing mobile specific taxes would increase penetration, of mobile communications. To achieve this, we would urge
usage and handset sales in the poorest regions of the world, Governments and mobile operators to work together to
with its strongest impacts felt in Sub-sahran Africa; and determine the economic impact of the sector, the ideal tax mix
“• Lower mobile specific taxes appear to have a limited impact and how these combine to meet the objectives of their country.
on Government taxation revenues. Whilst the immediate It appears that countries are more likely to reap the full social
impact of lowering taxes lead to a decline in direct and economic benefits available through such a joined up
Government revenues, these are mainly counterbalanced by approach and coherent economic thinking.”
indirect taxation (corporation tax and regulatory fees) and
the role of mobile communications as a driver of growth.
14

16. Global Mobile Tax Review 2006–2007
Executive summary
Acknowledgements
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Deloitte has the broadest and deepest range of skills of experts on Telecommunications or Tax matters please contact:
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for our innovation, collaboration, our solutions-led approach,
E jruffolo@deloitte.ca
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Telecommunications (TMT) Industry Group consists of more
than 5,000 member firm partners, directors and senior managers Asia Pacific – Nigel Mellor T +65 6530 5523
supported by thousands of other professionals. E nimellor@deloitte.com
TMT has dedicated practices in 45 countries, centres of Latin America – Carlos Ianucci T +54 11 4320 2736
excellence in the Americas, EMEA and Asia Pacific and serves E ciannucci@deloitte.com
over 90 percent of the TMT companies in the Fortune Global 500.
Economic Consulting – Chris Williams
Clients include some of the world’s top software companies, T +44 20 7007 1071
computer manufacturers, wireless operators, satellite broadcasters, E chrwilliams@deloitte.co.uk
and advertising agencies – as well as leaders in publishing,
telecommunications and peripheral equipment manufacturing.
The tax data collection and economic analysis for this report was
conducted by Deloitte & Touche LLP. The data and analysis is
subject to assumptions and limitations which are highlighted in
various sections within the full report.
This information contained herein has been written in general terms and Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its
therefore cannot be relied on to cover specific situations; application of the member firms, and their respective subsidiaries and affiliates. Deloitte Touche
principles set out will depend upon the particular circumstances involved and Tohmatsu is an organisation of member firms around the world devoted to
we recommend that you obtain professional advice before acting or refraining excellence in providing professional services and advice, focused on client
from acting on any of the contents of this publication. service through a global strategy executed in nearly 140 counties. With access
to the deep intellectual capital of approximately 135,000 people worldwide,
Deloitte Touche Tohmatsu would be pleased to advise readers on how to apply Deloitte delivers services in four professional areas – audit, tax, consulting and
the principles set out in this report to their specific circumstances. Deloitte Touche financial advisory services – and delivers more than 80 percent of the world’s
Tohmatsu accepts no duty of care or liability for any loss occasioned to any person largest companies, as well as large national enterprises, public institutions,
acting or refraining from action as a result of any material in this report. locally important clients, and successful, fast-growing global growth companies.
Deloitte & Touche LLP refers to the United Kingdom limited liability Services are not provided by the Deloitte Touche Tohmatsu Verein, and, for
partnership, a member firm of DTT. regulatory and other reasons, certain member firms do not provide services in
all four professional areas.
As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of
its member firms has any liability for each other’s acts or omissions. Each of the
member firms is a separate and independent legal entity operating under the
names “Deloitte”, “Deloitte & Touche”, “Deloitte Touche Tohmatsu”, or other
related names.
15

17. Global Mobile Tax Review 2006–2007
Executive summary
The GSM Association (GSMA) is the global trade association
representing more than 700 GSM mobile operator Members
across 218 countries and territories of the world. In addition,
over 190 Associate Members (manufacturers and suppliers)
support the Association’s initiatives as key partners.
Encompassing technical, commercial and public policy initiatives,
the GSMA focuses on ensuring wireless services work globally;
thereby enhancing the value of mobile services to individual
customers and national economies while creating new businesses
opportunities for operators and their suppliers.
For further information contact:
Mark Smith / David Pringle
GSM Association
Tel: +44 78 50 22 97 24 / +44 79 57 55 60 69
Email:press@gsm.org
16

18. Global Mobile Tax Review 2006–2007
Executive summary
Acknowledgements
Since 1976, Tarifica has been providing clear, up-to-date and Wireless Intelligence is a comprehensive database on the
accurate tariff information to network operators, regulators global mobile market. It covers all mobile technologies
and financial institutions. and includes over a million individual data points across
600 operators, 1,100 networks in 220 countries. Because of a
Our global, multilingual team of researchers constantly monitors
need for an up-to-date and accurate view of the global mobile
and reports on the ever-changing tariff environment whether for
markets, the GSM Association formed a unique partnership
voice, data, Internet or video services. Coverage is comprehensive
with Ovum, the leading industry analyst firm.
with Tarifica’s databases containing the Fixed and Mobile tariffs
for over 400 operators in 130 countries. Through the GSMA, the majority of the world’s operators have
access to their own data and, with over 40,000 database queries by
In-depth comparisons are easily obtained from quarterly pricing
members in 2006, this makes Wireless Intelligence one of the most
benchmarks of European, Middle-Eastern and Asia-Pacific
referenced sources of its kind in the world.
markets. The most important tariff developments worldwide are
analysed in a weekly newsletter which has become the must-read Wireless Intelligence provides operator data across operational
publication for service provider pricing specialists. and financial metrics and allows analysis at an operator, country,
Contact: John Lilley – Tel: +44 (0)207 692 5287, regional or global level. The metrics in the service cover subscriber
jlilley@accessintel.com. connections, growth rates, technology market shares as well as a
range of operational metrics such as churn, minutes of use and
financial metrics including revenue, capex and EBITDA margin.
17

19. To download a full copy of the report visit
www.gsmworld.com/tax

20. For more information contact:
GSMA London Office GSMA Dublin Office
1st Floor Mid City Place Block 2
71 High Holborn Deansgrange Business Park
London WC1V 6EA Deansgrange
United Kingdom Co. Dublin Ireland
Tel: +44 (0)20 7759 2300 Tel: +353 (0)1 289 1800
Email: publicpolicy@gsm.org
www.gsmworld.com