Sunday , October 17 2021

9% Communication Service Tax: Telcos resist Senate moves

Telecoms operators said on Wednesday that they would resist the plan by the Senate to pass a bill raising tax in the sector by nine per cent.

The Red Chamber on Wednesday began the process with the first reading of “A Bill for an Act to provide for Communication Service Tax (CST) as a veritable tool for economic diversification and for related matters.”

The bill is sponsored by Senator Mohammed Ali Ndume (Bornu South).

The Communication Service Tax (CST) rate chargeable will be nine per cent for the use of the communication services.

If passed, the proposed tax will replace the 2.2 per cent increase in Value Added Tax (VAT) being proposed by the Federal Government as announced by  Minister of Finance, Mrs. Zainab Ahmed.

There were signals yesterday that the new law may pit the government against some interests.

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Reacting to the ongoing process in the upper chamber of the National Assembly, the telecommunication operators yesterday warned against pushing through the bill. They described it as a fresh attempt to add to the burden of ordinary citizens.

The Chairman, Association of Licensed Telecom Companies of Nigeria (ALTON), Gbenga Adebayo, warned that the bill, if passed into law, would lead to an increase in end-user call tariff.

ALTON is the umbrella body of MTN, Airtel, Glo, 9mobile and other GSM Service providers.

Adebayo said the value of N1000 recharge card would be less than the nine per cent of the tax, adding that the proposed tax will add no value to operators who will become collection agents for the Federal Government.

His counterpart in the ATCON, an umbrella for players in the sub-sector, said the tax would negate the government’s plan to diversify the economy.

ATCON Chairman Olusola Teniola claimed that it will be wrong for the government to tax the citizens out of existence.

He said the impact of the tax would be transferred to the final consumers when such tax was introduced in Ghana, it led to tariff increase, Teniola said.

He wondered if the new tax was directed at reducing the number of internet users in the country, adding that the move will certainly be counter-productive, he said: “We are a law-abiding corporate citizens; we will do everything within the law to resist the tax.”

But the Bill promoter spoke of its merits. Answering reporters’ questions yesterday, Ndume said the CST would encourage wealth distribution in ways that would not affect the ordinary citizens.

He said the proposed increase in Value Added Tax (VAT) by the government would have negative effect on the economy as it would not only affect the prices of goods and services but take them beyond the reach of the common man.

Section 1 of the Bill said: “There shall be imposed, charged, payable and collected a monthly Communication Service Tax to be levied on charges payable by a user of an Electronic Communication Service other than private Electronic Communication Services.

“The tax shall be levied on Electronic Communication Services supplied by service providers. For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of Electronic Communication Service.

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“The tax shall be levied on the following Electronic Communication Services:(a)Voice Calls; (b) SMS; (c) MMS; (d) Data usage both from Telecommunication Services Providers and Internet Service Providers; (e) Pay per View TV stations, etc.”

On persons liable to pay the tax, Section 2 of the Bill said: “The tax shall be paid together with the Electronic Communication Service charge payable to the service provider by the consumer of the service.

“The tax is due and payable on any supply of Electronic Communication Service within the time period specified under sub-clause (5) of whether or not the person making the supply is permitted or authorised provide Electronic Communication Services.”

Section 3 added that the rate of the tax is nine per cent of the charge for the use of the communication service.

On the mode of collection and payment into the Federation Account, Section 4 of the Bill said: “The Federal Inland Revenue Service (FIRS) established under section 1 of the Federal Inland Revenue Service (Establishment) Act, 2007, shall be responsible for collection and remittance of tax, any interest and penalty paid under this Bill.

“The FIRS shall pay the tax collected together with any interest and penalty into the Federation Account.”

On the submission of tax return and time for payment, Section 5 of the Bill said: “All service providers shall file a tax return to account for the tax.

“The tax return shall be in a form prescribed by the FIRS and shall state the amount of tax payable for the period and any related matters that may be required.

“The return and the tax due to the accounting period to which the tax return relates shall be submitted and paid to the FIRS not later than the last working day of the month immediately after the month to which the tax return and payment relates.

“The FIRS may extend the period within which the tax return may be submitted and payment made on application in writing by a service provider, where good cause is shown by the applicant.

“The extension shall be communicated to the applicant in writing and shall state the circumstances under which the tax return shall be submitted for the particular period.

“A service provider who without justification fails to submit to the FIRS the tax return by the date is liable to a pecuniary penalty of N50, 000.00 and a further penalty of Nl0,000.00 for each day the return is not submitted.”

The payment of interest and outstanding tax, according to Section 6 of the Bill, “a service provider who fails to pay the tax by the due date shall pay monthly interest on the tax due at a rate of One hundred and Fifty per cent of the average of the prevailing commercial Banks lending rate as published by the Central Bank of Nigeria.

“For the purpose of sub-clause of this clause (1) any part of one month shall be deemed to be one month. Subject to clause 6 (6) where the interest payable under sub-clause (1) is not paid within one month after the due date, interest shall be paid on the unpaid interest at the same rate and in the same manner on the unpaid tax.”

On recovery of tax, interest or penalty due, Section 7 of the Bill said: “A tax or penalty of any interest due under this Bill which remain unpaid after the due date may be recovered by the FIRS as a debt.

“An amount shown as the tax on a bill or invoice for Electronic Communication Service usage is recoverable as tax from the person who issues the bill or invoice whether or not – (a) Tax is chargeable on the Electronic Communication Service Usage; or (b) The person who issues the bill or invoice is a person authorized to provide Electronic Communication Service under this Bill.

“Where a body either corporate or unincorporated which is liable for the payment of the tax, of any penalty on interest that arises under the Bill, defaults in payment, in whole or in part after written demand, the directors, partners and    the person in control of the body are jointly and severally liable to pay the sum due.”

“Where tax penalty of interest is payable and due under this Bill the FIRS may apply to the Court for an order that compels an individual or business – (a) from whom money is due or is accruing to the person required to apply the, interest or penalty, or…

“(b) who holds money for or on account of the person required to pay the tax interest or penalty to pay to the FIRS that money or so much of it as sufficient to discharge the tax interest or penalty payable and due.”

About Bukola Olanrewaju

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