Sudan shelves telecom profit tax for three years

Mergers, Acquisitions and Financial Results

Sudan has scrapped a 30 percent profit tax on telecom operators until the end of 2015, replacing it with a 2.5 percent levy on total income, the state news agency said, in a move that should help a sector hurt by the plunging value of the Sudanese pound.

Sudan had the highest sales tax on mobile in services in the Arab world, according to a September report by the Arab Advisors Group, deterring investment in what is a vital industry for a country still reeling from South Sudan's succession that led to the loss of three-quarters of Khartoum's oil output.

Sudan's decision, announced via the official Sudan News Agency (SUNA), reverses a government tax increase in December 2011, which raised sales taxes on telecoms companies to 30 percent from 20 percent and a profit tax to 30 percent from 15 percent.

It is unclear whether the new 2.5 percent tax on total income is in addition to, or replaces, the sales tax.

Sudan's three mobile operators — Zain Sudan, a 100 percent-owned subsidiary of Kuwait's Zain, state-owned Sudani and South Africa's MTN — typically buy equipment in hard currencies, such as dollars or the Euro, so the pound's plunge has upped expenditure at a time when average revenue per user (ARPU) — a key industry metric — is in retreat.