NCC Highlights Dangers of Multiple Taxation in Nigeria’s ICT Sector

…Calls for Tax Harmonization

The Nigerian Communications Commission, NCC has addressed the dangers multiple taxation poses to investment and innovations in Nigeria’s economy.

As a result, the telecommunications regulator therefore called for the harmonization of taxes among the three tiers of Government in Nigeria.

NCC’s Executive Vice Chairman, Prof. Umar Danbatta made this call at a regional stakeholders workshop on multiple taxation and regulations titled Multiple Taxation: An Impediment to Economic Development organised by the commission in Ibadan.

According to the commission, the workshop was held with senior government functionaries from all the States in the South West  Geo-political Zone to build a better understanding of how cancerous and harmful the issue of multiple taxations and regulations being imposed on the telecom companies by the States and their agencies and agents can be to the country’s development.

Represented by the Executive Commissioner – Stakeholder Management, Mr Adeleke Adewolu, Danbatta said despite the prospect of accelerated economic growth in Nigeria, the presence of multiple taxation, which the World Bank has termed ‘nuisance taxes’ has and continues to prove to be a bane on economic development in the country.

Speaking on this, NCC said naturally, taxation is the backbone of public finance. It provides guaranteed and sustainable sources of funding for social programs and public investments, it also serves as a tool curated by the government to effectively and efficiently distribute our commonwealth.

“It is thus evident that taxation is critical for making growth sustainable and equitable. Thus, taxation by design is an instrument for economic development and it is important to acknowledge and support the initiative of all tiers of Government in using taxation as an instrument for socio-economic development”, Danbatta said.

However, NCC Boss noted that supporting the tax initiatives by the various tiers of Government includes indicating where a category of taxes has become cancerous to economic development. These types of taxes typically manifest themselves in the form of multiple taxation and by design, they reverse growth, stifle innovation and discourage investment. In parabolic terms, they are the scarecrows mounted by the government to disincentivize development, he said.

While calling for collaboration in harmonizing and eliminating multiple taxation, Danbatta stressed that National Tax Policy 2017 emphasizes the need to eradicate multiple taxation at all tiers of government.

In his words, “Specifically, the Policy states that taxes similar to those being collected by a level of Government should not be introduced by the same or another level of Government.

“The paradox of multiple taxation is that it does not lead to an increment in government revenue, rather the crippling effect of these taxes, is that it makes otherwise profitable businesses, unprofitable. It negatively impacts the ease of doing business, shrinks the tax base, incentivizes tax evasion and complicates tax compliance.

“According to the World Bank, taxing a specific tax base will lead to increasing revenues up to a specific point, after which the overall tax revenue will decline because companies go out of business, or evasion increases significantly.”

Danbatta emphasized that in addition to these challenges, the economic burden of multiple taxation is further exacerbated by the administrative burden of complying with these taxes.

According to him, multiple taxation makes Nigeria an undesirable ground for breeding healthy business and competitive practices. The effect of this is that business enterprises in Nigeria struggle to compete with their counterparts abroad. These incidents weaken our economic foundations, devalue the symbol of economic strength, which is our currency – the Naira and contract our gross domestic product.

The NCC Boss also explained that the policy direction of the Federal Government is that all tiers of government are expected to align, as closely as possible, to the fundamental principles of taxation.

Highlighting the principles of taxation, Danbatta said they include neutrality, efficiency, flexibility, effectiveness and fairness, certainty and simplicity.

He said curbing arbitrary taxes in Nigeria will facilitate a conducive environment for conducive for local and foreign investment in the country.