OTT players don't pay SA taxes: MTN - TechCentral

OTT players don’t pay SA taxes: MTN

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Over-the-top (OTT) platforms such as WhatsApp and Skype don’t pay taxes in South Africa, said mobile network MTN.

MTN’s corporate services executive, Graham de Vries, made this claim in a presentation at a parliamentary meeting on Tuesday. The meeting discussed possible regulation for OTT services in South Africa.

Parliament’s portfolio committee on telecommunications & postal services set up the meeting after the CEOs of MTN South Africa and Vodacom last year said that OTT services don’t contribute financially to local networks.

After presentations from the likes of the executive director of Research ICT Africa, Alison Gillwald, and the Independent Communications Authority of South Africa (Icasa), MTN’s De Vries addressed MPs and stakeholders.

“It’s government’s prerogative to regulate around security, tax,” De Vries told parliament.

He then further posed questions about security of personal information that OTT services have access to.

The MTN executive’s comments came after Icasa CEO Pakamile Pongwana posed questions at the meeting around OTTs. “OTTs have no licence; no obligations,” Pongwana said at the meeting.

The Icasa CEO noted that while OTT services stimulate demand for data, they make “no contribution to network investment” and that “operators have no mechanism to recover costs”.

He also said that OTT providers can’t be monitored or intercepted.  — Fin24

36 Comments

  1. Can’t remember ever paying for Whatsapp. If there’s no payment, how can there be tax?

    Skype does charge VAT.

  2. Did this BSer mention that non of the political parties he was addressing, all have websites and do not pay taxes in SA either? Neither do universities. No apps like Google Maps or Uber. MTN sounds like the Nats who held back TV for decades.

    But the people who use Whatsapp DO pay taxes and the less we pay predatory parasites like MTN the more we have to spend in the real economy (job creation).

    In any case, with the growth of WiFi, mainly linked by fibre, the role of landline and cell providers must diminish, just as cell phones cannibalised landline companies’ markets. I am increasingly using Whatsapp and VOIP, avoiding cell and landline charges. If MTN wants my business, they must start providing more services and more value.

  3. Vusumuzi Sibiya on

    >>Over-the-top (OTT) platforms such as WhatsApp and Skype don’t pay taxes in South Africa, MTN’s corporate services executive, Graham de Vries, made this claim…

    …this corporate services executive, Graham de Vries, would definitely NOT be able to land a job as a SARS clerk and yet, here he is employed by MTN as an executive, to make hideously stupid remarks about free-to-download apps;

    …talk about having a demonstration of ignorance from a real “dumb pipe”

  4. If you are threatened then you will try everything in your power to control the threat or make it go away. They are threatened by Whatsapp and Skype. Time to think out of the box MTN like the music business had to do….

  5. Charley Lewis on

    That’s a specious argument. Websites stimulate demand for data, and make no contribution to network investment, with the operators unable to recover costs from them.

    However, the operators recover their costs from the users in the form of data charges.

  6. Richard Wickens on

    If Whatsapp and skype pull out there will just be another messaging app that takes it’s place, just because they are currently the biggest players does not mean they, and only they must be regulated. What they are trying to do is unenforceable, and the fact that they are sitting down and talking about trying to do so is a joke.

  7. What tax should they pay? Besides the Icasa CEO is talking complete rubbish (OTT … make “no contribution to network investment” and that “operators
    have no mechanism to recover costs”). Every time anyone uses Skype or WhatsApp, they use the Internet, for which we pay a very heavy premium in this country. If used on a cellphone (which presumably is what MTN and Vodacom are wingeing about), data could cost anything up to R1000 a month. Hardly “no contribution”, or “no mechanism to recover costs”.

  8. And the SPs like Vodagone and MTN have joined hands with the ANC in the “Milk The Consumer” train of thought. This wonderful idea can be likened to the e-Toll idea in almost it’s entire greedy origination. It remains to be seen whether these 2 major mobile operators’ antics will be tolerated by their subscribers. Fortunately we have an alternative in Cell C. I love how arrogant these clowns are in their belief that their subscribers will stay with their already overpriced business after they so blatantly want to screw us over, citing “Government called for it”… Exactly how ignorant do they think the public are?

  9. Cynic Scepticism on

    WhatsApp, as far as I know, was never free for Apple owners. From day one it cost $1. Whether that was for installation, or annual subscription, I’m not sure. On Android I used to see something to the tune of me starting an 11 or 7 month trial period, after which I would be charged $1. This never happened.

  10. Vusumuzi Sibiya on

    >>The Icasa CEO noted that while OTT services stimulate demand for data, they make “no contribution to network investment” and that “operators have no mechanism to recover costs”.

    This Pakamile Pongwana needs to be moved into a portfolio committee for energy and fund-raising for the nuclear program;

    …that’s exactly the kind of reasoning that we need to get Eskom sorted. All in SA who –

    >> make “no contribution to Eskom’s network investment”

    …must stop the “free-riding” on the grid; it’s noted that grid OTTs stimulate demand for electricity but paying for the watts only is not sufficient and a second bite into the operations is what will enable Eskom to support investment into their network.

  11. Cynic Scepticism on

    So now google has to be charged for providing email and search services (that we use Vodacom and MTN data to utilize). And the app stores, don’t forget them. We download apps, and that uses data. I think all services that could possibly consume data on a mobile device should be subjected to a blanket tax or regulation of some sort, and then Shameel Joosub can have clean underwear for a change. I hate being South African, I wish they’d just finally set this sh*t-hole on fire and be done with it.

  12. Andrew Fraser on

    I haven’t heard so much bullshit since the Icasa hearings on mobile termination rates. What a coincidence that it emanates from the same two companies.

  13. Andrew Fraser on

    Oh.. One more thing. Please fire the CEO of ICASA, because he obviously has no clue what he is talking about.

  14. Cynic Scepticism on

    Yes, but not for data usage, not for their Internet activity, and for sure as sh*t not FROM their American holdings. They would pay SA tax for sales and revenue generated locally, and in retail they would be liable for VAT as well.

    MTN and Vodacom want to charge Facebook, essentially for the privilege of having a presence in South Africa.

  15. Cynic Scepticism on

    We, the people, have nothing to do with it, and thus, nothing to be ashamed of. I am not ashamed of drunk drivers who kill people on our roads, just as I am not ashamed of the former circus clown that is our current president, as I didn’t vote for him. I am angry though. And frustrated. Things are going from bad to worse at an alarming rate, and there is just nothing to be done about it.

  16. That is what I have been saying. The SPs are terrified of WiFi. When you can make a call from one mobile device to another especially over WiFi it leaves them without the bloated revenue they have gotten so used to stashing in tax havens over the years and the reason they are moaning now is because of hand held devices like smart phones, notice they never worried about Skype when you could only use it on a laptop or pc. It is time for them to wake up and innovate, else they will be relegated to the museums with the dinosaurs. They had plenty of opportunity to innovate before whatsapp and Skype really took off. But they put their profits first and customers second as is always the case. Now they cry like babies that the’re needs to be regulation, bah humbug, and that they are loosing money. No they are not, their balance sheets are equalizing after many years of ripping off the man in the street, and now that they actually have to provide value they moan about the cost, please. In business there will always be a lag between investment phase and realising profit from that investment.

  17. Yup to go along with the other 200 or so that have been invented in the last 20 years.

  18. Andrew Fraser on

    Hang on, why should anyone (including SARS) get to double dip? I pay for data to my SP. i pay VAT on that… And should I pay for an app through iTunes or Google Play, I pay VAT.

  19. William Stucke on

    Please explain why the ICASA CEO should be addressing Parliament on a policy matter at all? He is not appointed by Parliament, is not accountable to Parliament, has no regulatory role whatsoever, and most certainly is not subject to the same stringent requirements of independence as Councillors are.

    Furthermore, his assertions are faulty. I suggest that his staff do some research and educate him. For example, Facebook, the owner of one of the most visited sites on the Internet (but about which we hear no complaints from the MNOs as it drives data use – paid for by the consumer) as well as the owner of WhatsApp – a service that is almost free (some users pay $0.99 per year) – invested as much in _NETWORK INFRASTRUCTURE_ last year as the MTN global group, and _TWICE_ what Vodacom invested.

    Read their annual reports.

    > “OTTs have no licence; no obligations,”
    Half true. None of the 1,000,000,000 domain names on the Internet have a South Africa licence for having a website. Not even the 1,000,000 registered in South Africa. And your point is what, exactly? As to obligations: even free speech has its limitations. All owners of websites are obliged to obey the law pertinent to the country in which they are domiciled. More to the point, when they have customers, they have a legal, moral and commercial obligation to treat those customers fairly, or they will be without customers.

    A point that seems to be forgotten in the arrogance displayed by the large MNOs.

  20. Yeah, these cell phone companies like to complain once they don’t get any money from something. We’re not going to forget so easily that we pay our cell phone companies a lot of money every month for our ‘contracts’, which is quite expensive even compared to other countries. They make enough money from their contracts and packages without charging for other things.

  21. Speak through the forthcoming local elections & prompt your friends & acquaintences to do so.

  22. Cynic Scepticism on

    Nobody in my circle of influence votes for the ANC, and not I, nor do anyone I know hold any power of influence over anybody that has voted for the ANC in the past and will continue to do so in future. When I say that nothing can be done about it, it was more a personalised expression of disdain and defeatism.

  23. I am an Apple Owner and was one of the early adopters that has a free account.

    I read somewhere they are dropping that $1 a year idea for private users.
    They want money out of business

  24. Cynic Scepticism on

    The subscription cost has in fact been waived. Whatsapp is now free for private users. I suspect the networks mostly took up arms because more and more people are running VOIP on their networks and these are driven by players like Whatsapp and Skype. Data revenue is smaller than voice.

  25. With the shenanigans going on outside our borders and the level of fraud in S.A. it would not surprise me if a few ‘sweeteners’ were being handed out by the greedy money suckers in order to get their way.

  26. These services have in many instances been the reason people would get a sim from these networks. So now that the benefit has had its run and the service itself starts to eat into their profits.. it becomes an issue. The hypocrisy.

  27. tongue in cheek on

    yeah I was wondering the same thing, I’ve never paid anything to whatsap, or Skype for uing their product, so, where is the capital gain for them to pay SA Tax? Methings the MTN chappy is obfusticating in desp-eration

  28. tongue in cheek on

    and this type of thinking from Captains of industry? they are supposed to be the drivers of the global economy in terms of efficiency, service delivery(QoS?) and customer orientated corporate behaviour. But of course they subscribe (at no charge) to the ANC pig trough revenue generating format, much like the Pharmacuetical and fossil fuel world.