As the government prepares to enact yet another tax, Nigerians will pay extra for calls and data. “It means that customers will now pay 12.5% tax on telecom services, we will not be able to subsidize the 5% excise duty on telecom services in Nigeria,” the government said.
As the federal government prepares to apply a 5% inclusive excise duty on telecommunications services in Nigeria, Nigerians will soon begin paying 12.5% tax on those services.
This was said by Zainab Ahmed, the Minister of Finance, Budget, and National Planning, on Thursday in Abuja at a stakeholders’ roundtable on the application of the excise duty on telecommunications services in Nigeria.
The Nigerian Communications Commission organized the event (NCC).
According to the News Agency of Nigeria (NAN), the existing Value Added Tax (VAT) on telecommunications services, which is 7.5%, will be increased by 5%.
Ms. Ahmed claimed that although the 5% excise charge was included in the Finance Act 2020, it was not put into effect. She was represented by the Assistant Chief Officer of the Ministry, Frank Oshanipin.
She said that the government’s interaction with stakeholders caused the delay in its implementation.
“Payments are to be made on monthly basis, on or before 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.
Telecommunications users would bear the burden, according to Gbenga Adebayo, chairman of the Association of Licensed Telecom Owners of Nigeria (ALTON).
“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,” he said.
Ikechukwu Nnamani, President of the Association of Telecommunications Companies of Nigeria (ATCON), stated that the 5% excise charge on telecom services was out of date with the times.
Ajibola Alude, the Executive Secretary, acted as Mr. Nnamani’s representative.
He said that the industry was in dire straits and urged that the 5% excise duty be reduced because it might result in job losses.
“It is not well intended, because the industry is not doing well currently,” he said.
The Assistant Controller, Lami Wushishi, spoke on behalf of the Controller General of Nigerian Customs (NCS), Hameed Ali, who stated that all active telecom service providers would pay the 5% excise charge.
The 5% excise charge, according to ALTON Executive Secretary Gbolahan Awonuga, is not good for business.
Mr Awonuga said, “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,” he said.
The excise Duty was to have been applied as part of the 2022 fiscal policy measures, according to Umar Danbatta, the Executive Vice Chairman of the NCC.
The industry, according to Mr. Danbatta, deemed the previously planned commencement date of June 1 inadequate and appropriately brought this up with the federal government.
He said that the NCC had spoken with the Nigerian Customs Service, the Federal Ministry of Finance, and advisers from the World Bank to obtain the necessary explanations.
We were able to better comprehend the excise duty’s goals and potential implementation methods thanks to these interactions.
The excise levy, he continued, applied to both pre-paid and post-paid telephone services.