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Dealing with Sim Box Fraud: Technology fine, but Good Tax Regulation is the way out

By Franklin Cudjoe

I have learned of the extraordinary performance of the Ghana Police, the National Communications Authority and the ‘famed’ SUBAH technology in arresting a gang of telecommunications thieves who use notorious gadgets to route calls through their terminals at lower costs hence denying government taxes. The Police must deal ruthlessly with these sim box fraudsters. That SUBAH was involved in this story to detect $35m in stolen taxes is revealing and must engage the attention of all concerned. Could SUBAH be a good technology after all but dogged with our politically immature procurement processes? Could SUBAH really be engaged to deal with these fraudsters? What type of equipment does SUBAH have to be this efficient? The media and telecoms experts must look into the matters expeditiously. Could some telcos unknowingly  be facilitating SIM BOX fraud? I hope not! 

Beneath this sophisticated technology theft though is the price for communicating over mobile phones in Ghana. I will urge the Minister for Communications Edward Omane Boamah and Finance Minister to not only dwell in Police swoops, but fix the problem from the angle of policy. Here is how: Government’s mandate for an increase in the termination rate for incoming international calls to $0.19 per minute, has priced the local telcos out of the market. The implications of this fixed $0.01 per minute is that, the interconnect carrier prefers to route international calls to Ghana through the simbox operators than through the telcos who are mandated to charge $0.19 per minute. This presents a more profitable option for the interconnect carrier and in the case of the simbox operators, all proceeds are withheld, causing financial loss to both the established telcos and the government of Ghana; a lose-lose situation.

Compared to Nigeria, cost of calling Ghana from the UK is up 200% higher which negatively impacts regional integration. Furthermore, research shows that as at 2011, number of minutes from the US to Ghana declined 48%. [Source: US Telecoms Trade Agreements 2013].I recommend a reduction or complete erosion of the arbitrage to discourage the practice of simboxing. This is supported by data which shows that the practice of simboxing does not exist in countries with zero arbitrage. Additionally, government should invest and resort to independent and more cost effective audits of operators traffic recording systems. Doing so will direct revenue through legitimate pathways where operators duly pay taxes to the government


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