World

Read

View

Stakeholders of the Nigerian Telecommunications Sector have rejected the Government’s attempt to reintroduce a 5% excise duty on telecommunications services. The body has described the move as detrimental to the current economic reality. 
According to the proposal, all telecom services regulated by the Nigerian Communications Commission (NCC) will attract a 5% duty.&nbsp; 
“Services, including telecommunications, gaming, gambling, betting, and lotteries, however, described, provided in Nigeria shall be charged with duties of excise at the rates specified under the Tenth Schedule to this Act in a manner as may be prescribed by the Service,” part of the proposal reads.&nbsp; 
The Association of Licensed Telecom Operators of Nigeria (ALTON) has raised serious concerns about the effect of the 5% levy. Chairman, Gbenga Adebayo, said in a statement that its implementation will increase the existing financial burden of the subscribers.&nbsp; 
“We stand by our objection to the proposed tax. We had written extensively about this before regarding the implications for consumers. Even as operators meant to collect these taxes, we believe it is insensitive to the subscriber today.” 
<figure class="wp-block-image size-full">
 <img loading="lazy" decoding="async" width="700" height="400" src="https://technext24.com/wp-content/uploads/2024/10/images-6-1.jpeg" alt="Alton Chairman, Gbenga Adebayo reacting to reintroduction of 5% excise duty" class="wp-image-237885">
 <figcaption class="wp-element-caption">
 Alton Chairman, Gbenga Adebayo 
 </figcaption>
</figure> 
He further expressed that the government is inconsiderate to have brought about the reintroduction of excise duty. “Given the challenges that the industry and the economy are facing, it would be insensitive for the government to introduce this type of levy on consumers at this time. We kick against it and think the government should rethink this proposal because the time is certainly not right for it,”&nbsp; 
Similarly, the president of the Association of Telecommunications Companies of Nigeria, Tony Emoekpere expressed that the association was surprised by the proposal. He pointed out that they are currently studying the situation. 
“We just received information about this reintroduction of the five per cent telecom tax, and we are currently studying the proposal to understand its full implications. The telecom industry has been clamouring for a tariff increase to sustain operations, and this new excise duty will only exacerbate the challenges we face,” Emoekpere said. 
He further noted that the excise duty’s reintroduction will hurt subscribers and operators. “We are here to see how this excise duty will affect the industry, but it seems clear that it will hurt both telecom companies and consumers,” he said. 
<h4 id="5-excise-duty-a-backstory" class="wp-block-heading">5% excise duty: a backstory</h4> 
The 5% excise duty was first introduced in 2022 during President Muhammed Buhari’s Administration. After facing several backlash from various stakeholders, it was <a href="https://www.merriam-webster.com/thesaurus/suspended" target="_blank" rel="noreferrer noopener">suspended</a> by President Bola Ahmed Tinubu in July 2023. 
The suspension was also followed by the import tax adjustment levy on certain vehicles, after concerns over its impact on consumers and the Nigerian economy. 
In May, there was an attempt to reintroduce excise duty after it appeared in a loan document. The document outlined the excise duty as a condition for securing a $750 loan from the World Bank. It proposed that the excise duty be taxed on telecommunications services and levied on electronic transactions processed through the Nigerian banking system. 
<div class="wp-block-image"> 
 <figure class="aligncenter size-full is-resized">
 <img loading="lazy" decoding="async" width="750" height="354" src="https://technext24.com/wp-content/uploads/2020/02/Report-65-of-Nigerian-Internet-Users-Now-Watch-Online-Videos.jpg" alt="Nigeria has lost 11.5m mobile subscribers in 1 year as telecoms contribution to GDP drops" class="wp-image-50111" style="width: 100%;height:auto" srcset="https://technext24.com/wp-content/uploads/2020/02/Report-65-of-Nigerian-Internet-Users-Now-Watch-Online-Videos.jpg 750w, https://technext24.com/wp-content/uploads/2020/02/Report-65-of-Nigerian-Internet-Users-Now-Watch-Online-Videos-300x142.jpg 300w, https://technext24.com/wp-content/uploads/2020/02/Report-65-of-Nigerian-Internet-Users-Now-Watch-Online-Videos-640x302.jpg 640w, https://technext24.com/wp-content/uploads/2020/02/Report-65-of-Nigerian-Internet-Users-Now-Watch-Online-Videos-380x179.jpg 380w, https://technext24.com/wp-content/uploads/2020/02/Report-65-of-Nigerian-Internet-Users-Now-Watch-Online-Videos-550x260.jpg 550w, https://technext24.com/wp-content/uploads/2020/02/Report-65-of-Nigerian-Internet-Users-Now-Watch-Online-Videos-600x283.jpg 600w" sizes="(max-width: 750px) 100vw, 750px">
 </figure>
</div> 
On Sunday, October 20, 2024, the Federal Government <a target="_blank" href="https://www.google.com/amp/s/punchng.com/fg-plans-5-tax-on-telecoms-services-others/%3famp" rel="noreferrer noopener">announced</a> a proposed 5% excise duty on telecommunications services, gaming, and betting activities as part of a new bill to overhaul Nigeria’s tax framework. 
The bill, titled, “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters,” was dated October 4, 2024, and obtained from the National Assembly. 
The reintroduction has since generated reactions from industry stakeholders and other relevant stakeholders. 
<a href="https://technext24.com/2024/08/28/telecoms-gdp-2019-to-2024-review/" target="_blank" rel="noreferrer noopener">Read also – Contribution to GDP: How Nigeria’s telecom sector fared between 2019 and 2024.</a> 
<h4 id="telecom-push-for-tariff-hike" class="wp-block-heading">Telecom Push for Tariff Hike</h4> 
The Nigerian telecom operators have been pushing for a 10% tariff increase. According to them, this will cover operational costs and the effect of the rising foreign exchange regime and inflation. 
The government has declined the proposal, urging the companies to implore strategic measures to counter inflationary pressures. 
<figure class="wp-block-image size-full">
 <img loading="lazy" decoding="async" width="800" height="400" src="https://technext24.com/wp-content/uploads/2023/08/telecoms-sector-was-3rd-highest-contributor-to-GDP.jpg" alt="telecoms sector was 3rd highest contributor to GDP" class="wp-image-210350">
</figure> 
Reacting to this, Adebayo stated, “While we advocate that the current tax regime is not reflective of the economic conditions, the government has argued that people’s purchasing power has reduced and that we shouldn’t increase fees.” 
“So, how come the government wants to tax the subscribers if they can’t allow us to increase fees to provide improved services reflective of the cost of operations?” he asked.&nbsp; “It’s like saying something else and doing something else.” 
<h4 id="legal-actions-in-view" class="wp-block-heading">Legal Actions in View</h4> 
Following the proposed reintroduction of a 5% excise duty on telecom services, the National Association of Telecommunications Subscribers of Nigeria (NATCOMS) has announced its plan to take legal action against the Federal Government. 
According to the President, Prince Adeolu revealed that the case, formally filed during the COVID-19 pandemic, will be revived in the court. 
“When they first introduced the five per cent excise duty, we went to court, but since it hadn’t been implemented, we decided to stay-action. Now that the government is moving forward with this, we will firm up our belts and get back to the courts,” he said.&nbsp; 
Adeolu expressed that the association will be forced to take drastic measures if the Federal Government proceeds with the tax. 
“The government needs to understand that this tax will force operators to look at load shedding. They want to squeeze the industry, and it could lead to severe disruptions,” he added.
The post <a href="https://technext24.com/2024/10/21/5-duty-telcos-reacts-sue-government/">5% duty on telecoms, gambling: Nigerian operators condemn move, may sue government</a> first appeared on <a href="https://technext24.com">Technext</a>.

5% duty on telecoms, gambling: Nigerian operators condemn move, may sue government

Technext.ng

Other articles published on Oct 21, 2024

What is the Latest Trending Blockchain Game "Off The Grid"?

Why RCO Finance is the Best Crypto to Buy in the US over Ripple and Cardano if You Want to Make $...

Sui Hub in Dubai Launched to Drive Expansion

This Week’s U.S. Economic Data: What to Watch for Crypto Market Prices

Pepe Unchained ICO Secures $20M for New Meme Coin Layer-2 Network, Opens Developer Grants

Bitcoin Price Dips Below $67K, Pausing Hopes for ATH Rally

Join our free newsletter for daily crypto updates!