CEM REPORT | Internet subscription, call rate and other telecom tariff is set to increase by 5 percent as the Federal Government is set to implement a 5% inclusive excise duty on telecommunications services in Nigeria.
The increase is part of the finance act 2022 but was not implemented.
According to the Minister of Finance Budget and National Planning, Zainab Ahmed, at a stakeholders’ forum, organized by the Nigeria Communication Commission (NCC).
The Minister said the delay in its implementation was a result of government engagement with stakeholders, adding that the President had just fixed the rate.
“Payments are to be made on monthly basis, on or before the 21st of every month.
The duty rate was not captured in the Act because it is the responsibility of the President to fix rate on excise duties and he has fixed five per cent for telecommunication services which include GSM.”
The Minister, who was represented by the Assistant Chief Officer of the Ministry, Frank Oshanipin, said the tax was part of the several ways the federal government was generating non-oil revenue.
“It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue.
“The responsibility of generating revenue to run government lies with us all.’’
The Chairman, Association of Licensed Telecom Owners of Nigeria (ALTON), Gbenga Adebayo speaking at the event said the additional 5% tax would be passed on to telecommunications consumers who will bear the burden.
“It means that subscribers will now pay 12.5 per cent tax on telecom services, we will not be able to subsidise the five per cent excise duty on telecom services.
“This is as a result of the 39 multiple taxes we already paying coupled with the epileptic power situation as we spend so much on diesel.’’
The Executive Secretary of ALTON, Gbolahan Awonuga, commenting on the addition said the 5% excise duty was not healthy for the industry, noting that the telecom service providers were already paying 2% of their annual revenue to the NCC amongst other taxes.
“We pay two per cent excise duty to NCC from our revenue, 7.5 per cent VAT and other 39 taxes. We are going to pass it to the subscribers because we cannot subsidise it.’’
Consequently, telecommunications users in the country will pay 12.5% on tax from the 12% they currently pay.
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Recall that it was reported earlier in May that President Muhammadu Buhari approved the collection of 5% as excise duty on telephone recharge cards and vouchers.
The charge is part of new items on the list of goods liable for excise duty on the Finance Act in the country.
According to reports, the Federal Government is expected to raise at least N150 billion from the duty as the collection was part of new items on the 2020 Finance Act signed by President Buhari.