Telecoms Service Tax Will Make Buhari’s Govt Unpopular – ALTON Warns

Staff Writer:
Association of Licensed Telecoms Operators of Nigeria (ALTON) said the introduction of the Telecoms Service Tax (CST) law without the harmonization of other extant laws is likely to make the current Government unpopular.
According to a statement from the Association on Monday, it added that CST will put pressure on the Nigerian tax system which will make it unattractive to investors and may also be counter-productive for targets on broadband penetration.
The body said its attention has been drawn to the statement credited to the Honourable Minister for Communication at a function in Osogbo, Osun State recently, in which he stated that “the proposed tax would also help to improve telecommunication infrastructure.
Barr Abeyayo Shittu is quoted as saying that “We have a lot of deficiency in the provision of infrastructure in the telecommunication sector. “And I believe that those who proposed the bill must have thought that government centrally relies on tax because without tax, government cannot operate.”
Countering the statement, ALTON noted that “instead of laying untoward hardship and heavy burden on an already impoverished citizenry, what government should be doing is coming up with policies that stimulate the economy and put measures in place to ensure a more efficient tax system and framework for tax compliance. A good place to start will be to review and cut down the cost of governance at all levels. The sheer magnitude of the effect of this law cannot be imagined.”
IT NEWS NIGERIA learned that there are 26 different taxes and fees levied on mobile operators and consumers, including national and local taxes on revenues, businesses and business sites as well as regulatory fees such as spectrum and permits fees.
ALTON also noted that its concerns are that the introduction and collection of the Tax without the exclusion of the applicability of the Value Added Tax (“VAT”) (which was introduced by the Value Added Tax Act and is also applicable to services rendered by Service Providers in the telecommunication sector) will amount to double taxation as the proposed Tax is an additional tax on communication services rendered to the same end users who already pay a five percent (5%) tax as VAT.
A Bill for an Act to provide for the institution of telecommunications service tax and for matters related thereto (CST), (a consolidation of HB. 525 and 327, sponsored by Hon. Saheed Akinade-Fijabi and Hon Bede Uchenna and co-sponsored by the Telecommunications Committee of the House of Representatives) has been sent to the Committee for Telecommunications in the House of Representatives for review.
The CST will be levied on service fees payable by users of electronic communication services at 9% of the charge for the service and will be borne by the customers. If the Bill is enacted into law, it will mandate service providers to file monthly tax returns with the FIRS with strict penalties for non-compliance.