Communications Tax: Experts Decry New Burden On Industry
In the last few weeks, a proposed communications service tax which sought to tax voice calls, SMS, MMS, Data and Pay TV used by subscribers has dominated the telecommunications space since it was presented as a bill before the national assembly with Nigerians describing it as another way of exploiting the struggling consumers.
The bill, titled ‘Communication Service Tax Bill (“CST” or the “Bill”) 2015’, seeks to impose, charge and collect Communication Service Tax (CST) and will be levied on service fees payable by users of electronic communication services at nine per cent and will be borne by the customers.
The rate of the CST charged by service providers is seen by fiscal experts as amongst other taxes being imposed by government to shore up its revenue base as the whirlwinds in the international oil market continue its depreciative impact on accruable earnings by the country from crude oil exports.
According to a ‘Tax Alert’ publication by PricewaterHouseCoopers (PwC), 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.
The bill provides that all service providers are to file tax returns and pay the tax due not later than the last working day of the month immediately after the month to which the payment relates. Failure to comply with this provision will attract stiff financial penalties on erring entities.
Ajibola Olude, executive secretary of Association of Telecommunications Companies of Nigeria (ATCON) said the bill should not be made to stand considering the inconvenience it would foist on subscribers. “Aleady, Nigerians are complaining of economy hardship, imposing another tax on them will add to their burden and in effect, reduce communications growth.
“As far as we acknowledge that it is a trying period for the economy that is not to say that we should transfer the burden on consumers who are also strongly affected by the harsh economy status. Already, subscribers are already paying high for telecom services compared to what is obtainable in other countries. If the bill is enacted into law, subscribers will reduce their interaction with telecom services and in turn affect the overall profits of service providers.” Olude noted.
Tolu Akinluyi, communications and technology executive, Accenture Nigeria said “There is a pressing need to address the issue of excessive regulations as well as multiple taxation at the federal and state levels and as well as at the local government level as these regulations and charges increase the cost and time taken to deploy services, which makes resolving quality of service challenges and meeting our national objectives difficult.”
Chairman of Association of Telecommunications Companies (Alton) Engr. Gbenga Adebayo said the industry is already over burdened with taxes and levies and if government adds the CST, it will drive away investments in the sector. “We appreciate the fiscal pressure on Ministries, Departments and Agencies (MDAs) of the respective federal, state and LGA, particularly, in the face of dwindling federal allocation.
“However, multiple taxation on our industry has remain one of the most critical risk to the growth if the sector” he said. He said “Eco Tax for gaseous emission and gaseous emission; Sewage, Sanitation and public convenience levy; Sanitation and refuse effluent tax; Business premises tax for base stations situated in farm land; Tenements rates charged per base station are few examples of the nature of taxes that are alien to our operations but aimed at telecom operators” the Alton chairman said.
Mr. Sola Fanawopo, managing director of eMaginations Ltd, public relations firm urged the government to seek other alternative ways to generate revenue noting such bills if passed into law may bring about double taxation as the phone companies would hike their charges as a result of the cost they would incur in complying with the law and filing returns.
