Telcos kick, as FG moves to implement 5% tax on calls, data

Federal Government, through the Ministry of Finance, Budget and National Planning has concluded plans to effect a 12.5 per cent tax on calls and data services provided by telecommunications companies as it moves to implement the 5 per cent inclusive excise duty on operators’ services in the country.

The development comes as the Association of Licensed Telecom Owners of Nigeria insisted that the burden of payment would be passed on the consumers.

The Minister, Ms Zainab Ahmed, who disclosed this at a stakeholders’ forum on implementation of excise duty on telecommunications services in Nigeria in Abuja organised by the Nigerian Communications Commission (NCC), also informed that the proposed five per cent will be added to the already existing 7.5 per cent Value Added Tax (VAT) on telecommunications services.

Ms. Ahmed, who was represented by the Assistant Chief Officer of the Ministry, Frank Oshanipin, said the five per cent excise duty has been in the Finance Act 2020 but was not implemented.

She said the delay on its implementation was as a result of government’s engagement with stakeholders.

“Payments are to be made on monthly basis, on or before 21st of every month. The duty rate was not captured in the Act because it is the responsibility of the president to fix rate on excise duties and he has fixed five per cent for telecommunication services which include GSM. 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 government lies with us all,” she said.

However, responding, the Chairman, Association of Licensed Telecom Owners of Nigeria (ALTON),Gbenga Adebayo, said the burden would be on telecommunications consumers.

“It means that subscribers will now pay 12.5 per cent tax on telecom services, we will not be able to subsidise the five per cent excise duty on telecom services. This is as a result of the 39 multiple taxes we already paying coupled with the epileptic power situation as we spend so much on diesel,” he noted.

Executive Secretary of ALTON, Gbolahan Awonuga, said the five per cent excise duty was not healthy for the industry.

According to Mr. Awonuga, the telecom service providers were already paying two per cent of their annual revenue to the NCC.

“We pay two per cent excise duty to NCC from our revenue, 7.5 per cent VAT and other 39 taxes. We are going to pass it to the subscribers because we cannot subsidise it,” he said.

On his part, the President of the Association of Telecommunications Companies of Nigeria (ATCON), Ikechukwu Nnamani, said the five per cent excise duty on telecom services did not conform with present realities.

Mr. Nnamani was represented by the Executive Secretary, Ajibola Alude, said that the state of the industry was bleeding and suggested that the five per cent 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 said.

Executive Vice Chairman of the NCC, Professor Umar Danbatta, 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.

We consider it imperative that these implementing agencies should also meet directly with telecoms industry stakeholders to address areas of concern.

“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.

“These engagements enabled us to better understand the objectives and proposed implementation mechanisms of the excise duty,” he assured.

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

Also, the Controller General of the Nigerian Customs (NCS), Hameed Ali, who was represented by the Assistant Controller, Lami Wushishi, said all active telecom service providers would pay the five per cent excise duty.