Revenue shortfall: Outrage over FG’s imposition of 5% excise duty on telecom services
…Nigerians to pay more for calls, others — ATCON
… NCC rallies stakeholders on implementation
By Ogaga Ariemu
Stakeholders, on Thursday, expressed mixed feelings about the Federal Government’s imposition of 5% excise duty on calls, text messages, and data services.
The development implies that telecommunications subscribers would pay five per cent tax on the services mentioned above.
In their separate reactions, the Association of Licensed Telecoms Operators of Nigeria (ALTON), Association of Telecommunications Companies of Nigeria (ATCON), and National Association of Telecoms Subscribers (NATCOMS) described the move as strange, insensitive and irresponsible.
Nigerian NewsDirect learnt about the 5% imposition during the Nigerian Communications Commission (NCC) “Stakeholders’ Forum on the Implementation of Exercise Duty on All Telecommunications Services” held yesterday in Abuja.
Speaking at the event, the Minister of Finance, Budget and Planning, Mrs Zainab Ahmed urged stakeholders to support the implementation of the 5% exercise duty on telecommunications services.
Zainab, represented by the Assistant Director, Tax and Policy, Mr Musa Umar, appreciated NCC for providing the platform to increase Nigeria’s revenue generation.
According to her, countries in Africa like Malawi, Uganda, Tanzania, others have all keyed into this revenue generation pattern.
She emphasised that this is needed to change Nigeria’s economic situation for good.
“The issue of revenue is not something that need to shy away from, our revenue can no longer take care of our needs as a country.
“Also Nigeria is no longer making enough money from oil revenue, hence the attention is shifting to non-revenue generation.”
She explained that the government is committed towards implementing the regulation in a seamless manner which will not affect Nigerians.
Earlier, in his remark, the Executive Vice Chairman/CEO NCC, Prof Umar Danbatta said the forum is necessary for stakeholders to get better clarification on the 5% exercise duty on telecom services implementation.
“As telecoms industry regulator, the Nigerian Communications Commission (NCC) has engaged with the Federal Ministry of Finance, the Nigerian Customs Service and consultants from the World Bank to get needed clarifications.
“This engagement 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 telecoms industry stakeholders to address areas of concern,” he stated.
On his part, Comptroller General of the Nigerian Customs Service, Hameed Ali, urged stakeholders to be patriotic toward implementing the policy.
Hameed, who was represented by the Assistant Comptroller General NCS, Mrs A.S Oshishi, revealed that telecommunications operators are expected to be duly registered with the service for seamless actualisation of the process.
“Either to pass the cost to consumer or capture it in an appropriation. The payment is to be made in arrears, on the 21st of every month,” he said.
Reacting to the development, Chairman, ALTON, Engr. Gbenga Adebayo, insisted that the new tax burden would be passed to subscribers.
“It is a strange move; it appears a bit unusual. Excise duty is supposed to be apportioned to goods and products, but we are surprised this is on Services.
“We will continue to support government but ALTON won’t be able to subsidise this on behalf of subscribers in addition to the 7.5% VAT making it 12.5% payable by subscribers to the federal government.
“We currently pay a lot of taxes, running into 39 of them, so we cannot add more to our existing burden. We won’t be able to absolve this on behalf of subscribers.
“The 5% Excise Duty will be paid by the subscribers. It will be collected by the operators on all voice and data services including OTT and remitted to the Nigerians Customs,” he stated.
On his part, the President of ATCON, Engr Ken Nnamani said, “the proposed exercise duty do not comply with principle of taxation, fairness, certainty, convenience and efficiency.”
Nnamani, represented by ATCON Executive Secretary, Mr Ajibola Olude, said FG has continued to turn blind eye on the issue of foreign exchange and other challenges facing telecom operators in Nigeria.
He added that the telecom industry is bleeding yet the federal government wants to exacerbate the plight of operators with additional taxation.
He appealed to the government to hat the step down implementation of the subsidy on the ground that many youths in Nigeria will lose their jobs.
He advised that the government should channel it efforts to developing other sectors.
Similarly, President National Association of Telecoms Subscribers (NATCOMS), Chief Deolu Ogunbajo said the government’s action is insensitive and ill-timed.
“It is unfortunate that 5% per cent excise duty is coming again together with other 38 taxes.”
He said other countries in Africa paying 5% tax on telecommunications services do not have 39 other taxes.
In his words, “This is insensitive and irresponsible. Government should not kill the telecom industry.”
In the same light, the National Disability Empowerment Forum, NADEF represented by Dr. Christopher Nwanoro, described the policy as adding salt to injury.
He said the people with disability will be worst hit if the policy is allowed to see the light of the day and called for concession if the government insists on implementing the duty collection policy.
Nigerian NewsDirect gathered that the affected telecommunications services include all services that require license from NCC such as talk time, Short message services (SMS), call-back services, call facilitation through VoIP and international call gateway.
Recall that on 31 December 2020, President Muhammadu Buhari signed into law the Finance Bill 2020 (now Finance Act 2020) which introduced amendments to 14 tax and fiscal legislations in Nigeria.
