As oil revenue dwindles, the Nigerian government is looking for other ways to generate income, and has therefore approved the implementation of a 5% excise duty on telecoms services.
In addition to the already existing 7.5% value-added tax (VAT) on telecoms, Nigerians will be paying as much as 12.5% to use broadband services.
Excise duty is the tax imposed at the time of manufacturing while VAT is the tax imposed on the sale of goods.
But Nigeria’s minister of communications and digital economy, Isa Pantami, has rejected the planned taxation, saying that due process was not followed because the chairman of the House Communications Committee was not involved in the decision making.
He thinks it is a badly timed and harsh burden on the people, and that it will negatively impact the sector’s contribution to the country’s gross domestic product (GDP).
The Association of Licensed Telecom Operators of Nigeria (ALTON) also thinks this attempt by the government to share the responsibility of revenue generation is burdensome. They have asserted that they are not in the best position to align with the incoming tax.
Facing revenue challenges due to the rising cost of operation, the telcos had requested for a 40% increase in the price of their services 3 months ago, but the Nigerian Communications Commission (NCC) dismissed that request.
Moreover, according to the president of ALTON, Gbenga Adebayo, they currently pay 39 other taxes. He asserted that any other tax will be footed by subscribers without any subsidisation from their end.
Some others like national president of the National Association of Telecoms Subscribers, Adeolu Ogubanjo, have made gloomy predictions about the effect of the new tax. He said the burden will also translate to job losses across the industry.
