• NATCOMs returns to court, wants marginal tariff hike for telcos
Telecommunications subscribers have kicked against the Federal Government’s proposed five per cent excise duty on telecoms services. The excise duty is also proposed on gaming and betting services as part of a broader effort to overhaul the nation’s tax framework.
This proposal, which is contained in the ‘Nigeria Tax Act’, aimed to impose excise duties on various services across the country.The bill, entitled ‘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 obtained from the National Assembly and is dated October 4, 2024.
Under the provisions of the bill, the government will impose a five per cent excise duty on telecommunications services, both postpaid and prepaid, regulated by the Nigerian Communications Commission (NCC). This duty will also apply to gaming, gambling, lotteries and betting activities in Nigeria.
In response to the government’s plan, the National Association of Telecoms Subscribers of Nigeria (NATCOMs) said the plan would suffocate the sector, which is seen to be in the Intensive Care Unit.
NATCOMS President, Deolu Ogunbanjo, told The Guardian that the plan was put on hold some months back, adding: “I think during Pantami’s tenure, we kicked against it.
We are kicking against it again. We are saying ‘no’ to it. We are going back to court on the matter. We are saying it will not stand.” He wondered why the Federal Government would say no tariff hike in the sector, only to plan to impose a five per cent excise duty on the sector, saying “it doesn’t add up.”
Ogunbajo said, “We have asked for a marginal increase of about five to 10 per cent because of operational cost. Which sector of the economy has not increased prices? But they said no to telecoms. The matter needs to be reviewed.”
Under the proposed bill, services, including telecommunications, gaming, gambling, betting and lotteries, however, described, provided it is in Nigeria, shall be charged with duties of excise at the rates specified under the 10th Schedule to this Act in a manner as may be prescribed by the Service.”
This means that all transactions linked to these services will attract the excise duty once the bill is enacted. Further analysis of the document showed that the bill seeks to regulate currency transactions by specifying that any difference between the official Central Bank of Nigeria (CBN) exchange rate and the actual transaction rate will attract excise duty.
The bill stated that any excess value in the exchange rates would be paid as excise duty under a self-assessment model.
“Where an exchange of currency transaction involving the naira is conducted within or outside Nigeria – (a) the transaction shall be conducted at an exchange rate not exceeding the prevailing exchange rate at the official market authorised by CBN; and (b) where the exchange rate of the transaction exceeds the prevailing exchange rate at the official market authorised by the CBN, the excess shall be payable as excise duty by the seller on a self-assessment basis as provided in the Nigeria Tax Administration Act,” it stated.
The telecoms tax comes after the Federal Executive Council (FEC), in September 2024, approved the bill as recommended by the Presidential Committee on Fiscal Policy and Tax Reforms.
Similarly, the bill contained plans to impose a 25 per cent tax on Nigerians earning above N1.5 million as salaries. The bill is expected to come into force in 2025 if it scales through the National Assembly. (Guardian)
