The Federal Government yesterday announced that subscribers would start paying 5% tax on calls, short message service (SMS), data and other telecommunication services.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed this during a “Stakeholders Forum on the Implementation of Excise Duty on All Telecommunications Services,” in Nigeria.
Ahmed, represented by the Assistant Director, Tax and Policy, Mr Musa Umar, argued that the high cost of running government businesses coupled with the global trend in the oil market made the government to shift its focus into non-oil revenue.
She said: “The issue of revenue is not something that we need to shy away from, as 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.
“And one of the legitimate areas that we feel the government can leverage upon to generate revenue for the country is through excise duty tax, particularly in the telecommunication industry.”
Ahmed defended that other African countries like Malawi, Uganda and Tanzania have all adopted this strategy to generate more revenues and boost their economies, and urged stakeholders to support the new excise duty.
She commended the Nigerian Communications Commission (NCC) for providing such a forum to engage with various stakeholders on how best to implement the excise duty rate in a seamless manner without any negative effect on the telecommunication industry.
She said the regulation of the excise duty, which is in a draft form, will also serve as the major tools in which the excise duty will be based.
“This law makes provision for excise duty for telecommunications service in pre-paid and post-paid. But this rate was not determined by the Finance Act because it’s the responsibility of Mr. President to determine the excise duty rate in the schedule attached to the Customs and Excise Management Act. To that effect Mr. President has fixed 5% on telecommunication services chargeable from 1st March, 2022.”
…one of the legitimate areas that we feel the government can leverage upon to generate revenue for the country is through excise duty tax, particularly in the telecommunication industry.
Resulting framework
In his opening remarks, the Executive Vice Chairman/CEO of NCC, Prof. Umar Garba Danbatta, said the forum is to ensure interaction between industry stakeholders and excise duty implementation agencies to ensure that the resulting framework adequately addresses the peculiarities of the telecoms sector.
“As telecom 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 telecom industry stakeholders to address areas of concern.
“In facilitating this Forum, the Commission is playing a dual role. As an agency of the Federal Government of Nigeria, it is our duty to support the implementation of government initiatives which impact the telecoms sector.
“The Federal Government expects our industry to effectively contribute towards enhancing revenues for the government so that it can fund the national budget and deliver on its critical responsibilities to all Nigerians. We cannot afford to fail in this regard.
“Secondly, 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.”
Also, the Comptroller-General of Customs, Col. Hameed Ibrahim Ali (Rtd), urged the stakeholders to collaborate with the Service in ensuring the successful implementation of the project.
Ali, represented by the Assistant Comptroller General, Mrs. Lami Wushishi, said: “The Customs and Excise Management Act CAP 2004(CEMA), Section 117(2) – stipulates that the date for the payment of excise duty shall be on or before the 21st of every month. It shall be paid by operators providing such services and they also have the choice of passing it into the consumers.”
He noted that telecoms service providers are mandated to register with the Nigeria Customs Service (NCS) on its official website at www.trade.gov.ng as well as provide their monthly returns for review and verification, warning that failure to do so would attract some penalties.
The move is insensitive and irresponsible on the part of the government, as it negates the policy of ease of doing business in Nigeria as well as the principles of taxation, which includes – fairness, adequacy, convenience and efficiency.
New tax is insensitive
However, the President, Association of Telecommunication Companies of Nigeria (ATCON), Ken Nnamani, kicked against the imposition of the new excise duty rate on telecom subscribers.
Nnamani, represented by ATCON Executive Secretary, Ajibola Olude, described the move as insensitive and irresponsible on the part of the government, as it negates the policy of ease of doing business in Nigeria as well as the principles of taxation, which includes – fairness, adequacy, convenience and efficiency.
“My suggestion to the government is that they should step the 5% excise duty rate. The ripple effect of this is that many of our youths will lose their jobs and will have crisis upon crisis in our country,” he asserted.
