Nigerians will soon start paying 12.5 per cent tax on telecommunications services as the Federal Government plans to implement five per cent inclusive excise duty on telecommunications services in Nigeria.
Minister of Finance Budget and National Planning, Mrs. Zainab Ahmed, said this at a stakeholders’ forum on implementation of excise duty on telecommunications services in the country in Abuja on Thursday.
The event was organised by the Nigerian Communications Commission (NCC)
The five per cent would be added to the already existing 7.5 per cent Value Added Tax (VAT) on telecommunications services.
Zainab, who was represented by the Assistant Chief Officer of the Ministry, Mr Frank Oshanipin, said the five per cent excise duty had been in the finance Act: 2020 but was not implemented, noting that the delay in its implementation was over the government’s engagement with stakeholders.
She said: “Payments are to be made on a 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,” the minister stated.
Also speaking at the event, the Chairman, Association of Licensed Telecom Owners of Nigeria (ALTON), Mr 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.
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“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 said.
Meanwhile, the President of the Association of Telecommunications Companies of Nigeria, (ATCON), Dr Ikechukwu Nnamani, said the five per cent excise duty on telecom services did not conform with present realities.
Nnamani, who was represented by the Executive Secretary, Mr Ajibola Alude, said 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.
On his part, the Controller General of the Nigerian Customs (NCS), retired Col. Hameed Ali, who was represented by the Assistant Controller, Mrs Lami Wushishi, said all active telecom service providers would pay the five per cent excise duty.
The Executive Secretary ALTON, Mr Gbolahan Awonuga, said the five per cent excise duty was not healthy for the industry.
Awonuga said 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.
Also speaking, the Executive Vice Chairman of the NCC, Prof. 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.
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He said the NCC had 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.
“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,” he said.
The NCC boss added that the excise duty covered both pre-paid and post-paid telecommunications services.
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