Sunday, 10th December 2023

Operators seek removal of 5% telecoms tax on telephony services

By Adeyemi Adepetun
12 July 2023   |   4:07 am
Telecommunications operators have called on the Federal Government not to only suspend the five per cent excise tax on telecoms sector but to remove it completely from the Finance Act.

[FILES] ALTON Chairman, Gbenga Adebayo

•Threaten to pass cost to subscribers, if implemented
Telecommunications operators have called on the Federal Government not to only suspend the five per cent excise tax on telecoms sector but to remove it completely from the Finance Act.

Speaking under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), the Chairman, Gbenga Adebayo, said the body welcomed the development and thanked President Bola Tinubu for the suspension, however, reminded the public that the immediate past Minister of Communications and Digital Economy, Prof. Isa Pantami, had made a case to ex-President Muhammadu Buhari for the exemption of telecoms sector from the tax.

“We have on record that approval was granted in that regard. The sector was exempted from that tax. But when the new administration came in, we started hearing about it again. So, the Executive Order President Tinubu signed was to uphold the waiver that was granted to the sector,” he stated.

With that in mind, Adebayo, while speaking on Channels TV, said the body has mentioned before that the burden of the collection of the five per cent tax will be on the telecoms operators, while the weight of the tax itself would be on the subscribers because currently, there is a 7.5 per cent value-added tax (VAT) on every service offered by operators, “if another five per cent is added, it will go to 12.5 per cent and that would have grave implications on the cost of services to end users.

“So, as an industry, we welcomed it, but truly, it would have been a burden on the subscribers and we also think that it will increase the cost of services and further deny access to many more people. But in this regard, we feel the suspension is good, but we feel a total abolition of it would be in the best interest of the industry and subscribers.”

This, according to Adebayo is because the telecoms sector currently faces over 39 different taxes and levies across the country. He said, while some are captured in several statues and others not in any, quite a number of them are repeated at Federal and State levels and subsequently decrease the cost of providing services to end users.

According to him, when issues of passing the cost of services to end-users emanate, some of these issues arose from the cases of multiple taxation.

“So, while we welcome suspension, we are calling for total abolition of the five per cent exercise duty from the Finance Act. Also, we appeal that there is a need to address cases of multiple taxation the industry is facing. We think it is not sustainable and contrary to the wheel of progress. As President has promised to look at all issues of multiple taxation, we think that the telecoms sector, where issues of the taxes we pay, over 39 of them across the country, should be addressed urgently.”

Speaking on having a working structure that would prevent issues of multiple taxation in the sector, Adebayo said there is a structure, stressing that issues of taxes that are listed in the constitution and regulation are not the problem, but those not under any tax header, such as effluent tax, discharge levy, Right of Way renewal levy, environmental sanitation levy, Diesel Storage Levy and a host of others. He said these sets of taxes have no relationship with the telecoms sector at all and in most cases are enforced at state and local government levels.

The ALTON boss said the behavior of tax collectors at the Local Government level is completely at variance with the will of progress.

Citing instances, he said times LG tax collectors go to lock up telephone sites; to telecoms offices, seize their tools, harass and arrest the workers, do all sorts, “which at the end of the day, such moves make operations very difficult.”

According to him, the problem is not in the taxes and levies that are clearly defined and listed either in the licenses or regulations or in the laws of the federation, but the problems are those ones, states often had to generate in the name of internally generate revenue (IGR).

Largely, he said FG should look at telecoms sector as national economic support infrastructure and provide it with the required requirements such as the Critical National Infrastructure protection.

“There are situations, where you even bring an approval from the Federal Government to state and the officials will tell you, I don’t report to Abuja, it is not applicable in my state. Some taxes at the federal level, the states would still want to collect same. For example, Environmental Impact Assessment, knowing full well that a telecoms site is telecoms site everywhere.

According to him, there must be synergy between the federal and state governments in terms of hamonisation of these taxes, stressing that they shouldn’t be at variance. He said the Federal Government should be firm in whatever directive it is handing out

“What we are seeing in the telecoms sector is very concerning. Concerning in the sense that the sector is seen as an extractive industry, where everybody wants something from the sector. So many things are disjointed, as far as tax administration is concerned in the country. So, the FG needs to be firm in whatever order is given out and ensure is implemented across the board. The sector needs more protection than what we currently have.

With the September date still in focus for the implementation of the Finance Act, where the five per cent telecoms tax is domiciled, Adebayo insisted that the position of the telecoms sector is for the total abolition of the telecoms tax, saying it is strange and alien to the sector because the industry offers services and not hardware.

He posited that telecoms support the lives of people, saying that government should not taxed subscribers to the brim, especially for the sake of the digital economy; this tax should be abolished completely.

According to him, if the tax is brought back in the future, “we are going to pass it to the subscribers. We shall act as revenue agent, where we collect on behalf of the Federal Government, then remit to them. As said earlier, the burden of collection will be on us, but the weight of the tax itself would be on subscribers and I am sure FG won’t want to impose more tax burdens on Nigerians.”