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FG considers 5% tax on call, text, data

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By Abraham Adekunle

FG considers on imposing 5% excise duty on call, text and data on subscribers.

Subscribers of telecommunication services in Nigeria may need to brace in the coming days as the Federal Government has concluded plans pursuant to the Finance Act, which was signed by President Muhammadu Buhari in 2020, to impose a five per cent excise duty on all telecommunications services in the country, ranging from calls to SMS and data services. The major stakeholders in the industry – the Association of Licensed Telecoms Operators of Nigeria (ALTON), the Association of Telecommunications Companies of Nigeria (ATCON), and the National Association of Telecoms Subscribers (NATCOMS) – have opposed the move.

These associations described the imposition as anti-people, provocative, strange, insensitive, and irresponsible. They made this known on July 28th, 2022 at a stakeholders’ forum organized by the Nigerian Communications Commission (NCC) in Abuja on the proposed implementation of the excise duty on all telecommunication services in Nigeria. The associations argued that the proposed tax would aggravate the suffering of Nigerians who had already been pushed into hardship and extreme poverty. The new excise duty imposition is part of the new Finance Act which was signed into law by Buhari in 2020.

Minister of Finance urges stakeholders to support FG’s drive.

The tax is to be remitted to the Nigerian Customs Service, following the directives of President Buhari to enforce the law on all telecom providers in the country as well as on all local and foreign goods and services. The Minister of Finance, Budget and Planning, Zainab Ahmed, urged stakeholders during her presentation at the forum to support the implementation of the excise duty. She said that the decision was informed by the dwindling revenue of the Federal Government from oil and gas.

Mr. Musa Umar, Assistant Director, Tax and Policy, who represented the minister, extended her commendation for the NCC for providing the opportunity to interact with stakeholders and to welcome their inputs in the revenue-generation drive. She said that other African countries such as Malawi, Uganda, Tanzania, have keyed into this revenue-generation pattern and that it is needed to change Nigeria’s economic situation for good. “The issue of revenue is not something that needs to be shied away from. Our revenue can no longer take care of our needs as a country. Also, Nigeria is no longer making enough money in oil revenue, hence, the attention is shifting to non-oil revenue,” she said.

Others give their input as stakeholders reject the idea.

The Executive Vice Chairman of NCC, Prof. Umar Danbatta, in his welcome address, said that the forum was mandated for stakeholders to get better clarifications on the excise duty. He said, “As telecoms industry regulator, the NCC has engaged with the Federal Ministry of Finance, the Nigerian Customs Service (NCS), and consultants from World Bank to get needed clarifications. These engagements enabled us to better understand the objectives and proposed implementation mechanisms of the excise duty. Nonetheless, we consider it imperative that these implementing agencies should also meet directly with telecoms industry stakeholders to address areas of concern.” The Comptroller-General of NCS, Col. Hameed Ibrahim Ali (Rtd), revealed that telecommunications operators are expected to duly register with the service for seamless actualization of the process.

He said, “Either to pass the cost to consumer or capture it in an appropriation, the payment is to be made in arrears on the 21st of every month.” In response, the Chairman of ALTON, Engineer Gbenga Adebayo described the new tax levy as a strange move and an unusual development amidst 39 different taxes payable by the telecom operators in the country. He insisted that the new tax burden would be passed to subscribers. “We will continue to support the government,” he said, “but ALTON won’t be able to subsidize this on behalf of subscribers in addition to the 7.5% VAT, making it 12.5% payable by subscribers to the federal government. The 5% excise duty will be collected by the operators on all voice and data services including OTT and remitted to the Nigerian Customs.”

ATCON, NATCOMS and NADEF kick against the new excise duty.

The President of ATCON, Engineer Ikechukwu Nnamani, said that the proposed excise duty does not comply with the principle of taxation, fairness, certainty, convenience, and efficiency. He called on the government to step it down. He said that the FG has continued to turn a blind eye to the issue of foreign exchange and other myriads of challenges facing telecom operators in Nigeria. He warned that if such move is implemented, it will further kill more smaller companies and aggravate the suffering of the masses. In the same vein, the President of NATCOMS frowned at the government’s proposed plan and cautioned that such a move would make life more miserable for the consumers. Finally, the National Disability Empowerment Forum (NADEF), represented by Dr. Christopher Nwanoro, described the policy as adding sorrow to injury and said people with disability will be the worst hit if the policy is allowed to proceed.

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