The Federal Government has announced that telecommunications subscribers will be subject to a 5% tax on calls, SMS, and data services.
Meanwhile, industry stakeholders have expressed dissatisfaction with the government’s decision to impose a 5% excise duty on all telecommunications services in Nigeria.
Speaking at the Stakeholders Consultative Forum on Excise Duty Implementation in Abuja yesterday, the Executive Secretary of the Association of Telecommunications Companies of Nigeria (ATCON), Ajibola Olude, said that given the hardship in Nigeria at this time, the government should reconsider its decision to impose a 5% excise duty on telecommunications operators.
He believes that the government should direct its resources toward other sectors in order to diversify the economy.
“What I am saying is that the proposed excise duty on all telecommunications companies is badly intended by the Ministry of Finance and National Planning and Nigeria Customs. And the current state of Nigerian communication is so bad that only about 756 Internet Service Providers (ISPs) were registered but only 10 is active because of issues with forex”.
“Since it is coming from the Ministry of Finance, I think they should understand that currently Nigeria is faced with inflationary pressure, which is 18 per cent now. If you add this increase, the level of inflationary pressure will come to 19 or 20 per cent. And this will further increase the level of poverty in the country. So, if you are going to pass this to Nigerians that are already burdened by the hardship in the country, this is not the best time to do so.
For me, it is not something they should embark upon. It is something they should turn down and leave the country as it is. Nigerians won’t be able to pay for this.
And another direct effect is that it will lessen investment. The Foreign Direct Investment (FDI) or Capital Importation will go down because this is a further leakage. It is not just good and I think the best thing the government should do is to develop other sectors.
They have been collecting tax from the people, they should channel it to the steel industry, manufacturing and so many other sectors. That is diversification of funds. It is not something they should implement now. They should consider it and change their decision,” he said.
Gbenga Adebayo, Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), insisted that the new tax burden be passed on to subscribers.
“It is a strange move, it appears to be a bit unusual”, he says. Excise duty is supposed to be levied on goods and products, but we’re surprised to see it levied on services. We will continue to support the government, but ALTON will be unable to subsidise it on behalf of subscribers in addition to the 7.5 per cent VAT, making it 12.5 per cent payable to the Federal Government by subscribers.