Telecom subscribers to pay 5% tax on call, text, data

The Federal Government has disclosed that telecommunications subscribers would pay a 5 per cent tax on call, SMS, and data services.

Indications to this development were dropped during a Nigerian Communications Commission (NCC) Stakeholders Forum on the Implementation of Excise Duty on all Telecommunications Services’ held on Thursday in Abuja.

Speaking at the event, the Minister of Finance, Budget, and Planning, Mrs Zainab Ahmed urged stakeholders to support the implementation of the 5 percent exercise duty on telecommunications services.

Zainab represented by the Assistant Director, Tax and Policy, Mr Musa Umar appreciated NCC for providing the platform to increase Nigeria’s revenue generation.

She highlighted that countries in Africa like Malawi, Uganda, Tanzania, and others have all keyed into this revenue generation pattern.

She emphasised that this 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-revenue”.

She explained that the government is committed towards implementing the regulation in a seamless manner that will not affect Nigerians.

Earlier, in his remark, the Executive Vice Chairman/CEO NCC, Prof Umar Danbatta said the forum is necessitated for stakeholders to get better clarifications on the 5% exercise duty on telecom services implementation.

“As the telecoms industry regulator, the Nigerian Communications Commission has engaged with the Federal Ministry of Finance, the Nigerian Customs Service, and consultants from the 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”, he stated.

On his part, Comptroller General of the Nigerian Customs Service, Hameed Ali urged stakeholders to be patriotic toward implementing the policy.

Hameed represented by the Assistant Comptroller General NCS, Mrs A.S Oshishi revealed that telecommunications operators are expected to be dully registered with the service for seamless actualization of the process.

“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”, he stated.

Reacting to the development, the Chairman, ALTON, Engr Gbenga Adebayo insisted that the new tax burden would be passed to subscribers.

“It is a strange move, it appears a bit unusual. exercise duty is supposed to be apportioned to goods and products, but we are surprised this is on Services.

“We will continue to support the government but ALTON, won’t be able to subsidy this on behalf of subscribers in addition to the 7.5% VAT making it 12.5% payable by subscribers to the federal government.

“We currently pay a lot of taxes, running into 39 of them, so we can add more to our existing burden. We won’t be able to absolve this on behalf of subscribers.

“The 5% Excise Duty will be paid by the subscribers. It will collected by the operators on all voice and data services including OTT and remitted to the Nigerians Customs”, he stated.

On his part, the President of ATCON, Engr Ken Nnamani said, “the proposed exercise duty do not comply with principle of taxation, fairness, certainty, convenience and efficiency”.

Nnamani represented by ATCON Executive Secretary, Mr Ajibola Olude said FG has continued to turn a blind eye to the issue of foreign exchange, others challenges facing telecom operators in Nigeria.

He added that the telecom industry is bleeding yet the federal government want to exacerbate the plight of operators with additional taxation.

He appealed that the implementation of the exercise duty should be stepped down because many youths in Nigeria will lose their jobs.

He advised that the government should channel its efforts to developing other sectors.

Similarly, President National Association of Telecoms Subscribers (NATCOMS), Chief Deolu Ogunbajo said the government’s action is insensitivity and ill-timed.

“It is unfortunate that 5 percent exercise duty is coming again together with other 38 taxes.

He said, other countries in Africa paying 5% tax on telecommunications services do not have 39 others taxes.

In his words, “this is insensitivity, and irresponsible. Government should not kill the telecom industry”.

The affected telecommunications services include all services that required license from NCC. It is talk time, Short message services (SMS), call-back services, call facilitation through VoIP, and an international call gateway.

It would be recalled that on 31 December 2020, President Muhammadu Buhari signed into law the Finance Bill 2020 (now Finance Act 2020) which introduced amendments to 14 tax and fiscal legislations in Nigeria.