Source: Togo First
(Togo First) – In Togo, the recently adopted 2024 finance bill incorporates a major tax reform on the taxation of mobile money transfers.
In line with the reform, these transactions will be subject to only one tax from now on–the Tax on Financial Transactions (Taxe sur les activités financières or TAF).
Before the reform, mobile money transactions were also subjected to the Value Added Tax (VAT). According to the government, this made it “difficult to manage tax declarations for these activities”.
The government told the parliament that “the major objective is not to subject the same activity to different taxes based on the activity being incidental or principal.”
The new reform came into effect on January 1, 2024. Lomé claimed it could reduce the costs borne by the end consumer, hence expanding the use of digital payments and fostering financial inclusion.
Before the reform, mobile money transfers in Togo were subject to a VAT rate of 18%. Under the new arrangements, they will be subject to a 10% Financial Activities Tax (TAF). The switch from one rate to the other – a difference of 8%, i.e. a reduction of almost half – could potentially lead to lower consumer rates, according to Togolese civil society organizations.
The reform is good news for the country’s mobile operators, but not only. Indeed, a Lomé-based fintech expert told Togo First that the move could also benefit fintech companies, such as Gozem which plans to launch its mobile money service, and payment aggregators, whose margins could increase subsequently.
Mobile Money has expanded rapidly in Togo in recent years, spurred by the country’s efforts for the digitalization of the economy.
According to an Afrobarometer survey, only one in four Togolese adults has a bank account, yet three times as many use mobile money accounts for their financial transactions.
However, some stakeholders fear that the government may decide to increase the tax on financial activities (TAF) over the next few fiscal years, from its current level of 10%, one of the lowest in the Uemoa.
