Stakeholders oppose FG’s 5% additional tax on telecom operations

By Onome Amuge.

Stakeholders in the telecommunications sector, particularly the Association of Licensed Telecom Owners of Nigeria (ALTON) and Association of Telecommunications Companies of Nigeria (ATCON), have raised opposition against the federal government’s proposed 5 percent inclusive excise duty on telecommunications service in the country.

Speaking at a recent stakeholders’ forum organised by the Nigerian Communications Commission (NCC) in Abuja, Gbenga Adebayo, chairman of ALTON, said the implementation of the tax (VAT) increase on telecoms services from 7.5 percent to 12.5 percent would pose a financial burden on consumers.

Dwelling further on its adverse implications on telecom consumers and operators, Adebayo said, “It means that subscribers will now pay 12.5 percent tax on telecom services, we will not be able to subsidise the 5 percent excise duty on telecom services. This is as a result of the 39 multiple taxes we are already paying coupled with the epileptic power situation as we spend so much on diesel.”

On his part, Gbolahan Awonuga, executive secretary of ALTON, said the 5 percent excise duty was not healthy for the industry.

According to Awonuga, telecom service providers were already paying 2 percent of their annual revenue to the NCC. This, he explained, is in addition to 2 percent excise duty the licensed telecom owners pay to NCC from revenue generated, 7.5 percent VAT and other taxes.

“We are going to pass it to the subscribers because we cannot subsidise it,” Awonuga said.

Also speaking at the event, Ikechukwu Nnamani, ATCON president, said the 5 percent excise duty on telecom services did not conform with present realities.

Nnamani, who was represented by Ajibola Alude, executive secretary of ATCON, said that the industry was bleeding and suggested that the 5 percent excise duty be stepped down as it could lead to job losses.

“It is not well intended because the industry is not doing well currently,” he added.

Zainab Ahmed, minister of finance, budget and national planning, had earlier in the stakeholders’ forum announced the implementation of the excise duty on telecommunications services.

Ahmed, who was represented, said the 5 percent excise duty had been in the Finance Act 2020 but was not implemented.

The minister explained that the delay on its implementation was as a result of government engagement with stakeholders.

“The duty rate was not captured in the Act because it is the responsibility of the president to fix the rate on excise duties and he has fixed 5 percent for telecommunication services which include GSM,” she said.

She added that payments are to be made on a monthly basis on or before 21st of every month.

“It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue. The responsibility of generating revenue to run the government lies with us all,” she said.

Umar Danbatta, executive vice chairman of the NCC, in his remarks, said the excise duty was to have been implemented as part of the 2022 fiscal policy measures.

Danbatta said the industry had considered the earlier scheduled commencement date of June 1 inadequate and duly took this up with the federal government.

He noted further that the NCC had engaged with the Federal Ministry of Finance, the Nigerian Customs Service and consultants from the World Bank to get needed clarifications and better understand the objectives and proposed implementation mechanisms of the excise duty.

“We consider it imperative that these implementing agencies should also meet directly with telecom industry stakeholders to address areas of concern,” Danbatta said.

“As the regulator of the telecoms industry, we are responsible for ensuring that industry stakeholders understand their fiscal and other obligations, so that they can maintain full compliance with government policy,” he said.

He added that the excise duty covered both pre-paid and post-paid telecommunications services.