Zain welcomes Sudan's 3-year tax exemption

Kuwait Telecom Group Zain welcomed Monday Sudanese government's decision to scrap a 30 percent profit tax on telecom operators for three years, replacing it with a 2.5 percent levy on total net profit. "We greatly appreciate the Sudanese government and president's tax exemption decision which will help boost Zain investments and to fulfill its commitments towards Sudan and its national economy," Zain Group Board Chairman Asaad Al-Banwan said in a press statement Monday. Sudan announced Sunday the cancellation of a 30 percent profit tax on telecom operators until the end of 2015, replacing it with a 2.5 percent levy on total income in a move that should help a sector hurt by the plunging value of the Sudanese pound. The decision reverses a government tax increase in December 2011, which raised sales taxes on telecom companies to 30 percent from 20 percent and a profit tax to 30 per cent from 15 per cent. Zain Sudan Deputy Board Chairman Bader Al-Kharafi underlined that the decision shows the government understanding of the challenges facing telecommunication sector. "It also shows that the Sudanese government encourage and back investors," Al-Kharafi said, adding that is encouraged to continue the development of its operations in Sudan. The statement unveiled that a senior delegation from Zain Group had recently visited Sudan and discussed with the Sudanese President Omar Al-Bashir the daunting challenges facing the mobile operators. "We have felt during our visit a clear understanding from President Al-Bashir and his government to help remove all hindrances and challenges facing Kuwaiti investments in Sudan," Al-Banwan said. 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. Zain is the market leader with a 52 percent share of Sudan's mobile subscribers, according to its first-quarter results, while South Africa's MTN and state-owned Sudani each had 24 percent.