Nigerians To Pay 12.5% Tax On Telecom Services

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed.

The Federal government has said Nigerians will begin to pay 12.5% tax on text messages, calls and other telecommunications services.

The Minister of Finance Zainab Ahmed made the disclosure on Thursday at the Stakeholders forum on implementation of excise duty on telecommunications services in Nigeria put together by the Nigerian Communications Commission (NCC) in Abuja.

Those who are already paying 7.5% Value Added Tax VAT on telecommunications services will now have to pay additional 5% excise duty on telecommunications services in Nigeria.

An Assistant Chief Officer in the ministry, Frank Oshanipin , who made the presentation on behalf of the minister said , “The 5% excise duty has been in the finance Act: 2020 but hasn’t been implemented. The delay to the implementation was as a result of government engagement with stakeholders,” he said .

He added that payments are to be made latest 21st of every month. “Payments to be paid on monthly basis, on or before 21st of every month”

According to Oshanipin, “The duty rate wasn’t captured in the Act because it is the responsibility of the President to fix rate on excise duties and he has fixed 5% as the duty rate Telecommunication service which include, GSM services.

“It is public knowledge that our revenue can not run our financial obligations, so to that effect we are to shift our attention to non oil revenue.The responsibility of generating revenue to run government lies with is all.” He added

The Executive Vice Chairman/CEO
Nigerian Communications Commission.
Prof. Umar Danbatta, who was represented by the Executive Commissioner Stakeholders Management, Adeleke Adewolu, in his opening remarks said, “As communicated in the Federal Government Circular of 1 March, 2022, the 5% Excise Duty was to have been implemented as part of the 2022 Fiscal Policy Measures, but the industry considered the earlier scheduled commencement date of June 1, 2022 inadequate and we duly took this up with the Federal Government.

“In this regard, I must acknowledge the efforts of the Minister of Communications and Digital Economy, Isa Pantami, who assisted in our engagement with the Hon. Minister of Finance, Budget and National Planning in order to make for better consultations and more efficient implementation.”

“As telecoms 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.

According to him, “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.”

According to the circular from government to the NCC “Telecommunications services provided in Nigeria shall be charged with duties of excise at the rates specified under the duty column in the Schedule as the President may by Order prescribe pursuant to Section 13 of the Act”. And

“The Excise Duty was subsequently fixed at 5%, and covers both pre-paid and post-paid telecommunications services.”

Chairman of the Association of Licensed Telecom Owners of Nigeria (ALTON), Gbenga Adebayo said subscribers will have to pay 100% meaning ,subscribers will now pay 12.5% tax on telecom services.

He said ALTON will not be able to subsidies the 5% excise duty on telecom services as a result of the 39 multiple taxes they already pay coupled with the epileptic power situation as we spend so much on diesel.

The President of the Association of Telecommunications Companies of Nigeria, (ATCON), Ikechukwu Nnamani who was represented by the Executive Secretary ATCON, Ajibola Alude, said, “the 5% excise duty on telecom services does not comply with present realities, the state of the industry is bleeding and my suggestion is that this should be stepped down as this will lead to job loses.

“t is not well intended, because the industry is not doing well currently.” He said

The Controller General of the Nigerian Customs, Col. Hameed Ali (Rtd) who was represented by the Assistant Controller NCS, Lami Wushishi in her remarks said “all active telecom service providers must pay the 5% excise duty.”

Executive Secretary ALTON, Gbolahan Awonuga, said the 5% telecom excise duty on telecommunications service providers not healthy for the industry because telecom services providers already pay 2% of their annual revenue to the NCC.

“We pay 2% excise duty to NCC from our revenue, 7.5% VAT and other 39 taxes. This 5% excise duty; we are going to pass it to the subscribers. Because we cannot subsidise it for the subscribers.”

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