Experts Warn Against Communications Tax

Services Tax
  • Experts Warn Against  Communications Tax 

With Information Communication Technology,ICT, being considered as a resort to salvage the economy in its perilous times, experts have advised Federal Government against introduction of communication service tax.

They posited that the government should rather provide incentives for operators in the sector to encourage more investment.

According to the President of Association of Telecommunication Companies of Nigeria ,ATCON, Olusola Teniola, while the government was struggling to balance its budget in the face of recession, it must provide enabling environment such that would sustain businesses and not to further discourage investment through multiple taxes.

It would be recalled that association which recently paid a courtesy visit to the Senate President, Dr. Bukola Saraki, appealed to the government to cut down the proposed CST from nine per cent to 0.2 per cent .

“The truth is that there is severe over-taxation in our industry. It explains the slow penetration of services into areas yet to be covered by our services across the country. Contrary to popular belief, telecommunication operators and service providers are barely sustaining their existence in these hard times.

“There are reasons to suggest that the desire to widen the tax net is laudable and that as things stand telecommunication is about one of the few areas where the net-capture may be widened,” the ATCON boss stated.

Still maintaining this position, Teniola stated that an attempt to introduce additional tax to a sector that was still battling excessive taxes would do more harm than good to the economy.

The ATCON President who restated the association’s position at a media briefing yesterday noted that the proposed move would be technically and economically disastrous.

“Now that the Central Bank had exhausted all the tools in its arsenal to remedy economic problems, it is high time we talked less and acted more as we may be heading towards depression if we don’t act fast.

“At a time like this when the government is looking at diversifying the economy through ICT, it is imperative that the sector is projected positively by making it attractive to both operators and consumers.”

Suggesting how to make the sector beneficial to operators, Nigerians and the economy, Teniola pointed out that “Government should come up with incentives like tax holiday, tax rebate and other motivations that would drive foreign investment into the country and create a broadband environment as data is gaining more popularity than voice service.

“It is necessary at this stage that the local content bill be adopted and also implement the bill in Oil &Gas to ICT through the Office of Nigerian Content Development in ICT (ONC).This will help reduce capital flight.

He was quick to identify lack of access to foreign exchange as one of the challenges demotivating operators in the sector hence, urged government to look into it without any delay.

He expressed the readiness of the association to work closely with the authority at resolving and arriving at an appropriate balance to present economic problems adding that the association was committed to defend and sustain the investment of its members.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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