Call and data costs will double as FG invokes new telecommunications tax

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VSall and data rates may increase by up to 100% if the federal government’s plan to increase the consumption tax on telecommunications services materializes, Daily Trust can report.

Daily Trust reports that the federal government recently unveiled plans to introduce a 5% excise tax on telecommunications services, increasing the total consumption tax on telecommunications services to 12.5%.

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The new tax regime, according to industry sources, will not only affect subscribers, but will also add a tax burden to telecom operators, which would result in higher tariffs.

If the 5% increase is finally implemented, according to industry experts, Nigerians will now pay up to N40 per call minute, up from around N20. And data rates could also rise to around N2,500. naira per gigabyte.

The finance minister, who unveiled the plan at a stakeholder forum on the implementation of excise duty on telecommunications services in Nigeria organized by the Nigerian Communications Commission (NCC), said the 5% excise duty was included in the 2020 finance law.

She said accrued taxes would be paid on a monthly basis, no later than the 21st of each month. The move, according to the minister, was part of the government’s efforts to boost non-oil revenues in the face of falling revenues, especially from the oil sector.

The proposal, however, put the Minister of Finance, Budget and National Planning, Zainab Ahmed, and the Minister of Communication and Digital Economy, Professor Isa Ali Pantami, on a collision course.

While the Ministry of Finance cites presidential approval to apply the new excise duty on telecommunications services, as provided for in the finance law, the Ministry of Communication and the Digital Economy kicked on the grounds that the new tax would be harmful to the sector and to subscribers .

Telecom players, experts oppose it

In addition, Nigerian Telecom Consumers, under the umbrella of the National Telecommunications Subscribers Association, described the Federal Government’s decision to increase the total consumption tax on telecommunications services, which include GSM to 12.5%, as “irresponsible and inopportune”.

According to the association, Nigerians are already suffering from the harsh economic conditions and another telecom subscriber tax is making them even poorer, especially since telecom services are essential for everyone.

The President of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, has called the excise duty unusual, saying it will increase the burden on telecom operators as they already have 39 other taxes which were imposed on them.

Adebayo, who spoke virtually at a forum last week, said his association may not absorb the tax on behalf of subscribers, noting that they will shift the burden on subscribers to pay higher prices for the services.

The Executive Secretary of the Association of Telecommunications Companies of Nigeria (ATCON), Ajibola Olude, has also opposed the proposed tax, saying it fails to adhere to principles of taxation which include equity.

The implementation of the excise duty will, according to him, lead to job losses; pointing out that the proposed excise duty on all telecommunications companies is ill-intentioned, he said.

The President of the National Association of Telecommunications Subscribers (NATCOMS), Chief Adeolu Ogunbanjo, also lamented that the sector is already heavily taxed with payment made on each recharge card coupled with the existing 7.5% VAT.

According to him, the new excise duty will cumulatively increase the tax to 12.5% ​​including VAT, which will be a huge burden on Nigerians. The move, he said, is “insensitive and unpleasant”.

Ogunbanjo urged the government to reverse its decision to increase the tax for the benefit of the people, as the telecommunications industry is the last hope of the common man and should not be destroyed.

A telecommunications consumer in Lagos, Mr Lawrence Abi said the masses might not feel the impact of the excise duty since it does not apply to edible products.

He said: “As essential as communication is, how many people know how much they are charged per minute? More so, we paid a higher amount at the beginning of GSM. It will therefore have no effect on goods and services. We also have alternatives to calls such as WhatsApp calls.

“Overall, it’s better than additional consumer loans,” he said.

However, the Nigerian Communications Commission (NCC) said there were no immediate plans from the operators to raise tariffs.

The Minister of Communications and the Digital Economy had, last Monday, expressed his dissatisfaction with the federal government’s efforts to introduce excise duties on telecommunications services.

Pantami, in his address at the first edition of the Nigerian Telecommunications Indigenous Content EXPO (NTICE), on the theme “Stimulating Indigenous Content Development through Innovation and Commercialization”, held in Lagos, underlined the need for government and stakeholders to continue to support the sector, not burden it unnecessarily.

“The Minister for Communications and the Digital Economy is not happy with any effort to introduce telecommunications excise duties. When the VAT was increased to 7.5% I was not consulted I only heard the announcement and I think there is something questionable and I am glad we are on the same wavelength with our members of the National Assembly. They too were not consulted despite the fact that they are part of the committee.

“Beyond making our position known, we will go behind the scenes and oppose any policy that destroys the digital economy sector. It is a sector that we cherish so much and we are ready to go all the way, legitimately and legally to defend its interests. he said.

Contacted yesterday, Pantami maintained his lack of support for the planned excise duty hike.

When asked why Pantami is not in favor of the new tax hike, his spokesman Uwa Suleiman said. daily stufft reporter to contact the NCC for clarification on his principal’s statement about his lack of support for the excise duty on telecommunications services.

But when contacted, the NCC’s public affairs director, Mr. Reuben Mouka, said that “the minister had made his position public (at the Lagos event). He didn’t hide it. »

Why the Minister of Communication opposed the excise bill

A senior ministry official said Pantami was against raising excise duties on telecom services as it could scare off investors and make it harder for Nigerians as telecoms could raise data and call rates due to tax.

Furthermore, Daily Trust understood that the Minister was bitter over the lack of proper engagement by the Ministry of Finance on the issue.

“Yes, there was a letter from the Ministry of Finance informing us of the plan to start the collection of excise duties, but the Minister replied to let them know that we had not been consulted and also pointed out how this law will increase hardship for our citizens and harm the growth of the digital economy sector,” he said.

According to him, there was no proper stakeholder engagement by the Ministry of Finance, including a public hearing on the proposed arrangements to allow all stakeholders to provide inputs.

“We have not been informed and the competent committees of the National Assembly have not been informed either,” he added. Another source at the ministry said the minister had promised telecom operators that he would meet with President Muhammadu Buhari on the matter.

One of the telecom operators’ officials told one of our reporters that they were not given a date as to when the new excise duty would come into effect.

“But you, they can take us by surprise and start this month; we can never tell,” the senior telecommunications official, who asked not to be named, told our reporter.

We consult on implementation – Department of Finance

However, a spokesman for the finance minister said the ministry was consulting with stakeholders on excise duty collection.

Responding to Daily TrustDuring yesterday’s inquiry, the finance minister’s special adviser for media and communications, Yunusa Tanko Abdullahi, said that the new tax regime stipulated that the collection of excise duties should take effect from the 1st June 2022, the end of a three-month moratorium provided by the ministry.

He said the minister had, “see circular dated March 1, 2022, informed the Nigeria Customs Service and other Heads of Government Ministries, Departments and Agencies (MDAs) including the Federal Ministry of Communication and the digital economy, the President’s approval of the implementation of the 5% excise duty on telecommunications services as of June 1, 2022. The circular provided for a moratorium of four- ninety (90) days from March 1, 2022 before the implementation of the excise duty”.

Dr Tanko said the new provision has not yet been implemented due to “the need to ensure a reasonable transition period before the implementation of the new tax, as well as to provide clarification to all stakeholders on the modalities of implementation”.

He reiterated that the excise was based on the provisions of the Finance Act 2020 which “introduced ‘telecommunications services’ supplied in Nigeria as liable to excise duty under Section 21(2) of the Law on Customs and Excise Tariffs, etc. (consolidation), CAP C49, LFN 2004. This therefore means that all the stakeholders have, by this singular provision, knowledge of the Law”.

He said the ministry was working with stakeholders including the Manufacturers Association of Nigeria (MAN) and the Association of Telecommunications Operators of Nigeria (ALTON) on how to implement the excise duty.

By Abdulaziz Abdulaziz (Abuja), Zakariyya Adaramola and Christiana T. Alabi (Lagos)

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