Operators Tasks FG on Tax Harmonization, Seek Removal Of 5% Telecoms Tax on Telephony Services

Operators under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) has tasked the Federal Government on harmonisation of taxes for the telecoms industry.

ALTON Chairman, Gbenga Adebayo said this on Channel TV while appluading President Bola Tinubu for the suspension of the five per cent excise tax on telecoms sector. However, he pushed for the complete removal from the Finance Act.

According to him, there must be synergy between the federal and state governments in terms of hamonisation of these taxes, stressing that they shouldn’t be at variance. He said the Federal Government should be firm in whatever directive it is handing out.

In his words, Adebayo said “While we welcome the suspension, we are calling for total abolition of the five per cent exercise duty from the Finance Act. Also, we appeal that there is a need to address cases of multiple taxation the industry is facing. We think it is not sustainable and contrary to the wheel of progress. As President has promised to look at all issues of multiple taxation, we think that the telecoms sector, where issues of the taxes we pay, over 39 of them across the country, should be addressed urgently.”

Also Read: Executive Order: Tinubu Suspends Finance Act, Customs Tariff, 5% Excise Tax on Telecoms Services

Speaking on having a working structure that would prevent issues of multiple taxation in the sector, Adebayo said there is a structure, stressing that issues of taxes that are listed in the constitution and regulation are not the problem, but those not under any tax header, such as effluent tax, discharge levy, Right of Way renewal levy, environmental sanitation levy, Diesel Storage Levy and a host of others.

He said these sets of taxes have no relationship with the telecoms sector at all and in most cases are enforced at state and local government levels.

According to him, the problem is not in the taxes and levies that are clearly defined and listed either in the licenses or regulations or in the laws of the federation, but the problems are those ones, states often had to generate in the name of internally generate revenue (IGR).

Gbenga Adebayo also noted the body has mentioned before that the burden of the collection of the five per cent tax will be on the telecoms operators, while the weight of the tax itself would be on the subscribers because currently, there is a 7.5 per cent value-added tax (VAT) on every service offered by operators, “if another five per cent is added, it will go to 12.5 per cent and that would have grave implications on the cost of services to end users.

“So, as an industry, we welcomed it, but truly, it would have been a burden on the subscribers and we also think that it will increase the cost of services and further deny access to many more people. But in this regard, we feel the suspension is good, but we feel a total abolition of it would be in the best interest of the industry and subscribers.”

This, according to Adebayo is because the telecoms sector currently faces over 39 different taxes and levies across the country. He said, while some are captured in several statues and others not in any, quite a number of them are repeated at Federal and State levels and subsequently decrease the cost of providing services to end users.

According to him, when issues of passing the cost of services to end-users emanate, some of these issues arose from the cases of multiple taxation.

The ALTON boss said the behavior of tax collectors at the Local Government level is completely at variance with the will of progress.