Telcos, subscribers move against proposed 9% service tax

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Nigeria’s telecoms operators and consumers at the weekend opposed the passing into law of a bill currently in the National Assembly, which seeks to impose a nine per cent tax on users of electronic communication services (ECS) in the country.

According to a report obtained by New Telegraph from a tax-consulting firm, PricewaterHouseCooper (PWC), the categories of communication services liable to the tax include voice calls, short messaging service (SMS), multimediamessaging service (MMS), data and pay-television service.

Throwing more light on the proposed bill, KPMG, another consulting firm, said in a document obtained by this newspaper, that the bill, titled, “The Communication Service Tax (CST) Bill, 2015,” is a private member bill.

For CST purpose, “User” is defined as “a customer or subscriber of any electronic communication network or broadcasting service and includes a customer that is an operator or provider of electronic communications network or service.”

In effect, customers who purchase ECS solely for resale (middlemen) are also required to pay CST on their purchases.

As contained in the bill, providers of ECS are required to collect CST upon supply of services and remit the tax to the Federal Inland Revenue Service (FIRS) no later than the last working day of the month following the month of transaction. However, this timeline may be extended in certain circumstances, according to the proposal of the bill.

Failure to submit CST returns by the due date would attract a penalty of N50, 000 plus N10,000 for each day of default, and interest at the rate of 150 per cent of the average prevailing commercial bank lending rate published by the Central Bank of Nigeria (CBN).

Also, refusal of service providers to provide government access to the network nodes attracts a penalty of 5 per cent of the annual gross revenue of the last audited financial statements.

Furthermore, failure to pay the interest due on default within one month would attract additional interest on the unpaid interest.

According to bill, the Minister and the FIRS, in collaboration with the Ministry of Communication and the Nigeria Communication Commission (NCC) are to appoint an agent, who will establish both electronic and physical monitoring mechanisms to monitor, analyse, verify, save all necessary data and information both electronic and physical.

In addition, the FIRS, the ministry of communications, NCC and such appointed agents must be given access to the network nodes of service providers at an equivalent point in the network where the network providers billing systems are connected.

Meanwhile, telecoms consumers, currently using the over 152 million telephone lines to make calls, access data, currently spend an estimated N2.8 trillion on services.

Experts say this will increase by nine per cent if the bill is eventually passed into law. As such, telecoms subscribers, telecoms operators and other consumer advocacy groups have expressed reservations to such a bill.

President, National Association of Telecoms Consumers (NATCOMS), Mr. Deolu Ogunbanjo, said any bill that would further add to the cost burden being borne by subscribers should be repelled. “Already, we spend a lot of money on service and we do not get value for the money because of unsatisfactory quality of service we get and you are talking of imposing fresh taxes,” he said.

Also, telecoms operators have also objected to such a tax, saying they are already over-whelmed with multiple taxations. National President of their umbrella association of telecoms firms, the Association of Telecoms Companies of Nigeria (ATCON), Mr. Lanre Ajayi, said, “Today, as telecoms companies, we are faced with cases of multiple taxations at all levels of government and yet another bill is being proposed to introduced new tax.”

Similarly, according to some of the telecoms consumers, who spoke with this newspaper yesterday, such a law considered to be government’s way of increasing its tax revenue, is anti-people.

“I don’t think government is being fair enough to introduce this kind of tax regime. It should focus on other areas to raise its internationally-generated revenue (IGR),” said Samuel Bamidele, an Ikeja-based businessman.

Also speaking, an Ogun State-based contractor, Mr. Jide Fadayomi, said, “With the coming bill, it means telecoms subscribers should be prepared to pay for telecoms services.”

Another subscriber, Chioma Jude, said, “The move will go against the tenets of healthy competition, whose result is always reduction of cost of services for subscribers,” stressing that “something must be done by the consumer protection groups in the country to stop the passage of the bill into law.”

Both the Head of Consumer Protection Council (CPC), Lagos, Mr. Joshua Yakubu and Founder, Consumer Advocacy Foundation of Nigeria (CAFON), Sola Salako, could not comment on the bill at the weekend because they have not seen the contexts of the bill.

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