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Operators kick as NITDA demands new taxes, levies under proposed bill

By Adeyemi Adepetun
18 August 2021   |   2:52 am
Despite its goal of creating an effective, impartial, and independent regulatory framework for the development of the Nigerian information technology sector and digital economy

Despite its goal of creating an effective, impartial and independent regulatory framework for the development of the Nigerian information technology sector and digital economy, operators in the sector have kicked against some provisions in the proposed bill in the National Information Technology Development Agency (NITDA) Act.

Director-General/CEO of NITDA, Kashifu Inuwa Abdullahi

The new bill is expected to repeal the National Information Technology Development Agency Act No 28, 2007.

Recalled that earlier in the year, precisely in March, the Director-General of NITDA, Kashifu Abdullahi, had noted that to keep up with the pace of innovation that has swept the country, there should be a realignment of the Act with “tenets and ideals of the Fourth Industrial Revolution” and Nigeria’s Digital Economy Policy.

As such, Abdullahi was of the view that some drastic measures must be taken to reposition the sector.

Operators however have raised concerns about some aspects of the proposed bill describing it as ambiguous and may require further consultation before it becomes an Act.

Largely, the proposed bill wants technology companies operating in Nigeria to get a license, pay pre-tax profit levies, and NITDA will be able to sanction whoever (person or company) that operates contrary to the new Act’s provisions

For instance, Section 6, 13, 20, 21, and 22, which talked about NITDA’s power, licensing and authorisations, and offences and penalties, among others, raised some pertinent issues.

Section 6 arrogated new powers to NITDA, which included the ability to fix licensing and authorisation charges, collect fees and penalties and issue contravention notices and non-compliance with the Act.

The agency also reserves the right to “enter premises, inspect, seize, seal, detain and impose administrative sanctions on erring persons and companies who contravene any provision of the Act”, subject to a court order.

In Section 13, NITDA proposes establishing a fund (The National Information Technology Development Fund) to carry out the country’s digital economy objectives. This fund is expected to come through Grants-in-aid, fees, accrued money under administrative payments, and levies charged from tech companies.

The bill declares that tech companies making a yearly turnover of N100 million will have to pay a levy of one per cent of their profit before tax.

Speaking to The Guardian on the bill, the Nigeria Coordinator, Alliance for Affordable Internet (A4AI), Olusola Teniola, said it is best for NITDA to widely consult all stakeholders on what is being proposed, especially concerning licensing, permits, and fines.

Teniola said such a move will have an impact on innovation and “where technology will best be harnessed in the digital space. NITDA needs to educate the ICT community on why they have proposed what they are planning to do.”

Moving in the direction of Teniola, a telecoms expert, Kehinde Aluko, said the bill, if it becomes an Act, will present a whole new level of threat to the industry, especially the burgeoning startup sub-sector of the economy.

Aluko stressed that the bill negates President Muhammadu Buhari’s push for ease of doing business in Nigeria, “I think something needs to be done about it as fast as possible.”

Section 20 said NITDA would issue licenses and authorisations for technology companies regardless of their size. The licenses are classified into three— product, service provider, and platform provider.

According to this section, any person or body corporate who operates an information technology or digital economy service, product, or platform contrary to the provisions of this Act, commits an offense.

Individuals found guilty by the agency will be fined not less than N3 million or placed into custody for a year or more. The bill states NITDA can also decide to charge such a person both the fine and imprisonment.

Corporate bodies, on the other hand, risk a fine of not less than N30 million against it if found guilty. The ‘principal officers’ of the companies may also serve a prison sentence for two years or more.

NITDA noted that individuals or corporates that deny personnel from the agency to carry out duties under the Act will be fined not less than N3 million and N30 million respectively. There are also prison terms, which range from a year to two in this section for individuals and members within a corporate body.

The bill further revealed that any company which falls into the category of paying levies and does not pay after two months will be liable to a fine of 0.5 per cent of the total amount to be paid every day after the default.