Connect with us

Markets

Communication Tax: Subscribers, Business Leaders Ready for Showdown

Published

on

operators

The proposed communication tax is one tax too many, and may trigger widespread reactions if the bill is eventually passed into law.

Although the ‘controversial’ Communication Service Tax bill has passed the first reading at the House of Representatives. The major telecommunications companies in the country are all against it, and have vowed to do all they could to resist it.

For the telecoms firms and subscribers, it is seen as a wrong approach to generating revenue amid a sinking economy and an impoverished people.

“We are going to mobilise the Nigeria Labour Congress, the civil society organisations and the entire nation against it.

“We shall bring the government of Nigeria to a standstill should the lawmakers at the National Assembly continue with the process of passing that bill into law.

“In fact, we must not even allow a second reading of the bill, or allow them to hold a public hearing, because most times when you allow them to hold a public hearing, they do so in secrecy just to ensure that people do not oppose their (lawmakers’) decision,” the President, National Association of Telecommunications Subscribers, Mr. Adeolu Ogunbanjo, told our correspondent.

Upon passage and assent, the CST bill, which is currently in the Senate, will compel telecommunications service subscribers, including satellite television providers like DSTV, to pay additional tax on services rendered by their providers.

The others include GoTV, Startimes, CONSAT and other telecoms operators. Services such as voice calls, SMS, MMS, data and pay TV will all have an additional nine per cent tax imposed on the services; meaning that the subscribers will pay the usual cost of service, plus nine per cent of that cost.

“It is one tax too many. Already, there are 26 different taxes being paid by Nigerians. Again, all the various components of telecoms are being taxed; for instance, the Subscriber Identification Module card, handsets, among others, take about five per cent tax already,” Ogunbanjo said.

He said, “Again, the cybercrime tax that was signed into law last year takes 0.5 per cent of tax.

“Also, when the operators want to lay their fibre optic cables in Lagos, they pay a minimum of N500 per metre tax. And by the time they have laid the cables in several metres, that would have amounted to millions of naira in tax.

“It is even worse outside Lagos, where operators are charged many times over what they pay in Lagos.”

Business leaders, notably the Lagos Chamber of Commerce and Industry, say the Federal Government needs to balance its drive for taxation against the demand of the private sector to have a friendly business environment.

“We know that the government is seeking to diversify its revenue base. But it is also true that the private sector players would like to see an investment-friendly environment, especially in the light of the prevailing high cost of doing business in the country,” the LCCI President, Nike Akande, said.

According to her, the chamber believes that it is in the best interest of Nigerians to have a virile, robust and growing economy. “Creation of a good business environment is imperative to making this proposal happen,” Akande said.

The Partner at PricewaterhouseCoopers, Taiwo Oyedele, said the proposed communication tax as it affects the firm would be over N20m per month.

“But then they have constructed the bill on wrong assumptions and have overestimated, because if the tax on communication and Internet services will be increased, then definitely the users of these services will drastically decrease, resulting in them making way less than they anticipated and estimated,” Oyedele said.

He said research had proved that Nigeria was one of the lowest tax-compliant countries, despite having a population of about 180 million people.

“There are only 10 million taxpayers from the 36 states. Therefore, we expect that policies made should leverage the telecommunications sector to help expand tax rate, not imposing tax on telecommunication services, thereby discouraging the sector instead of encouraging it,” he said.

He stated that the government should focus more attention on tax evaders and increase the number of taxpayers, rather than imposing taxes on telecommunications, which might end up retarding the wheel of progress in the economy and country as a whole.

The President, Association of Licensed Telecoms Operators of Nigeria, Gbenga Adebayo, said the proposed law would lead to a decrease in the flow of revenue, as investors would take their investments to other countries with lower tax rates.

“Nigeria needs investment so as to provide employment, especially to our growing youth. Owing to that increase in call rate, there will be drastic reduction in the composition of data usage, as well as voice call, SMS, MMS, pay tax and the like, which will reduce usage and the country’s GDP,” Adebayo said.

“ALTON’s position as regards the nine per cent tax is that when the legislature is drafting policies, the policies should be investment-friendly, which will in turn be beneficial to the whole country and economy at large,” he added.

Meanwhile, findings from investigations conducted by our correspondent show that while Nigeria’s tax rates are not the highest comparatively, the country is doing very poorly in terms of the time taken to comply and the number of payments (which together impact negatively on the ease of doing business and investor confidence).

However, the Minister of Communication, Adebayo Shittu, said there were many areas in Nigeria where there were no access to Internet, to telephone and the like.

“By 2018, we hope to have accomplished 30 per cent of widespread use of telecommunications in all the areas of Nigeria, but presently, we have accomplished only 10 per cent. But then there is a probability that with the nine per cent tax rate charge, accomplishing this will be almost impossible,” Shittu said.

A top executive in one of the four major telcos in the country described the communication tax as a “Greek gift.”

Pleading not to be mentioned, he said, “In fact, that is a Greek way of internally generating revenue, because you cannot claim to be alleviating the sufferings of the people, yet you turn back to take whatever you must have given to them.”

The idea to go ahead with the passage of the bill, despite earlier resistance, may have pitted the telecoms firms against Shittu.

According to the telcos, the feeling is that Shittu has done little or nothing to stop the lawmakers from moving to pass the bill.

Another telecoms employee, who spoke on condition of anonymity, said, “If the minister, despite our pleas for understanding, could still remain calm, even in the midst of the hardship being experienced by Nigerians (subscribers), then it is obvious that he (the minister) has got nothing to offer the country.”

He added, “The minister had better take a bow now, than remain in office and preside over the collapse of the 2018 project that is aimed at deepening broadband penetration in the country.

“Can you deepen broadband penetration by denying Nigerians access to the Internet and making it difficult for them to make calls?”

At a time when the drive should be intensified to attract investors – local and foreign – to commit their resources to rescuing the troubled economy, concerned Nigerians are worried that the lawmakers are seeking to enact laws that will introduce disincentives.

The proposed CST will not only deter new investors from coming into Nigeria, but it will also force the current foreign investors to stagnate further investments.

According to a telecoms analyst, Constance Azuru, the CST is not a wise move from an investor’s perspective.

“The CST bill is retrogressive for an economy that requires help from all fronts to alleviate the sufferings of its people, the same people who will now be further taxed,” Azuru said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Crude Oil

Nine Oil Producing States Pocket N625bn in 2 Years

Published

on

Oil - Investors King

The federal government has revealed that Nine oil-producing states pocket N625.43 billion as 13 percent oil derivation, subsidy, and SURE-P refunds in just two years.

This was made known in a statement released on Friday by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu.

According to the statement, the states that benefited from the refunds include Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, and Rivers States. Garba Shehu, however, added that the states still have about N1.1 billion as outstanding benefits due to them. He added that the refund has been accumulated since 1999.

Making reference to the comments made by the Governor of Rivers State, the Presidency noted that the Buhari-led regime will continue to render equal service to all the states regardless of affiliation, Investors King learnt. 

Between October 2, 2021, and January 11, 2022, the presidential spokesman disclosed that the states were paid in eight instalments, while the ninth to 12th instalments are still outstanding. 

Meanwhile, Garba recalled that data obtained from the Federation Account Department, Office of the Accountant General of the Federation,  showed that a total of N477.2 billion was released to the nine states as a refund of the 13 percent derivation fund on withdrawal from Excess Crude Account (ECA), without deducting derivation from 2004 to 2019, leaving an outstanding balance of N287.04 billion.

“Abia State received N4.8 billion with an outstanding sum of N2.8 billion, Akwa-Ibom received N128 billion with an outstanding sum of N77 billion, Bayelsa with N92.2bn, leaving an outstanding of N55 billion”.

“Cross River got a refund N1.3 billion with a balance N792 million, Delta State received N110 billion, leaving a balance of N66.2 billion, Edo State received N11.3 billion, with a balance of N6.8 billion, Imo State, N5.5 billion, with an outstanding sum of N3.3 billion, Ondo State, N19.4 billion with an outstanding sum of N11.7bn while Rivers State was paid 103.6 billion, with an outstanding balance of N62.3 billion” the statement read. 

According to the presidential spokesperson, states also got N64.8 billion as a refund of the 13 percent derivation fund on deductions made by Nigeria National Petroleum Company Limited without payment of derivation to Oil Producing states from 1999 to December.

Garba concluded that the president has approved the outstanding payment of N860.59 billion from the refunds which will soon be released to the benefiting states. 

Continue Reading

Markets

Flashing Green

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude

Published

on

Traders Wall Street

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

We’re seeing green flashing across the board on Thursday, with sentiment buoyed by positive signals on Fed rate hikes and China’s Covid response.

While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced – slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult. Knowing what the Fed intends to do next is far more valuable than what it thinks it may do 6-12 months down the line.

And anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets. The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been.

Positive signals

The signals coming from China also look very positive. While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed. The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.

We shouldn’t be naive to the fact that a move away from the policy won’t be easy and there’ll be plenty of setbacks. But it’s certainly a step in the right direction that, along with the measures announced to revive the property market, could put the economy on a much better path.

A huge few days for oil markets

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful.

Gold testing range highs

Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower.

Some relief for cryptos

The risk relief rally is coming at just the right time for bitcoin, helping it to recover from the lows to trade around $17,000. This is around the highs of the last few weeks since it settled after its latest plunge. Whether it will be enough to revive interest in the cryptocurrency, I’m not sure. The FTX fallout is continuing to weigh heavily on the space and the prospect of more contagion or scandals is hard to ignore.

Continue Reading

Crude Oil

Oil Revenue into Foreign Reserve Dropped From $3bn Monthly in 2014 to Zero in 2022

Published

on

Oil

The official foreign exchange receipt from crude oil sales into Nigeria’s official reserves has dried up steadily from above US$3.0 billion monthly in 2014 to an absolute zero dollar today, the Central Bank of Nigeria (CBN) governor, Godwin Emefiele disclosed.

Speaking at the 57th annual bankers’ dinner organized by the Chartered Institute of bankers of Nigeria (CIBN) in Lagos, the CBN governor noted that there has been a significant loss in foreign reserves due to the naira’s struggle and the rise in demand for forex. 

He added that the sharp increase in the number of Nigerians who are seeking education in foreign countries particularly the UK has resulted in an unprecedented demand for foreign exchange. 

According to him, the number of student visas issued to Nigerians by the UK alone has increased from an annual average of about 8,000 visas as of 2020 to nearly 66,000 in 2022.

Emefiele also lamented about the level of crude oil theft in Nigeria which has significantly affected the country’s oil production. He noted that crude oil theft has adversely impacted the Country’s foreign exchange reserves.

Investors King had earlier reported that Nigeria has lost its coveted position as Africa’s largest oil producer after oil production dropped below the mark of 1 million barrels per day. 

Nigeria currently trails Angola, Libya and Algeria to the fourth position. 

Meanwhile, on the Naira-4-Dollar scheme which the CBN introduced to boost migrant remittances into the Nigerian economy, the CBN governor noted that the scheme has largely been successful. 

“I am happy to note that, so far, the Naira-for-Dollar scheme has been successful in increasing remittance inflows through our registered International Money Transfer Organisation (IMTOs),” he said.

Emefiele also noted that the introduction of the National Domestic Card Scheme (NDCS) will help to reduce the operating cost incurred by commercial banks while using foreign cards. 

It could be recalled that the CBN earlier announced that it planned to introduce Nigeria-made transactional cards to replace well-known cards such as Visa and MasterCard.

Continue Reading
Advertisement
Advertisement




Advertisement
Advertisement
Advertisement

Trending