Efforts by the federal government to impose a 5% excise duty on telecom services were rejected by telecom operators, who argued that Nigeria’s economic situation did not justify such a tax.
This was the main issue at the stakeholders’ forum on the enforcement of excise duty on all telecommunications services, which was organized by the Nigerian Communications Commission (NCC) in Abuja yesterday.
The Ministry of Finance, Budget and National Planning and the Nigerian Customs Service defended the proposed imposition of the excise duty.
Minister of Finance, Budget and National Planning, Zainab Ahmed, who was represented by Musa Umar, Deputy Director of Fiscal Policy, said the government has taken the right steps to generate revenue as is done in many countries. other parts of the world, although he urged telecom operators to comply with the policy.
Deputy Director of Administration at the Ministry of Finance, Budget and National Planning, Frank Oshanipin, said the excise duty had become necessary to generate revenue to fund the national budget in the face of falling oil revenues .
In his opening speech, the Executive Vice President of the NCC, who was represented by Adeleke Adeolu, Commissioner for Stakeholder Engagement at the commission, said the policy was born under Article 37 of the 2020 finance law.
He added that the law provided that telecommunications service providers “shall be subject to excise duty at a rate specified in the schedule of duties, the President having fixed by order the excise duty at 5%”.
However, the President of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, described the excise duty as unusual, adding that it will increase the burden on telecom operators as they already have 39 other taxes imposed on them.
Adebayo, who spoke via the virtual platform, noted that his association may not absorb the tax on behalf of subscribers, stressing that they will shift the burden to subscribers to pay higher prices for services. However, he affirmed his association’s commitment to help the government in its desire to generate revenue.
Also speaking through virtual means, National Chairman, National Association of Telecommunications Subscribers (NATCOMS) Adeolu Ogubanjo said the sector is already heavily taxed with payment made on each top-up card coupled with existing VAT which is now 7.5%.
He noted that the new excise duty will cumulatively increase the tax to 12.5% inclusive of VAT, which will be a huge burden on Nigerians. He said “it’s quite insensitive, very intrusive and unpleasant”.
He urged the government to reverse its decision for the benefit of the people, as the telecommunications industry is the last hope of the common man and should not be destroyed.
The Executive Secretary of the Association of Telecommunications Companies of Nigeria (ATCON), Ajibola Olude, has opposed the proposed tax, saying it fails to adhere to principles of taxation which include equity. He said the implementation of the excise duty will lead to job losses.
He said: “The proposed excise duty on all telecommunications companies is ill-intentioned by the Nigerian Ministry of Finance, National Planning and Customs. And the reasons are that the current state of Nigerian communication is so bad that currently only about 756 ISPs have been registered but only 10 are active due to currency exchange issues.