Senate to Reject VAT Increase, Proposes 9% Communication Tax

• Senate to Reject VAT Increase, Proposes 9% Communication Tax

Nigerians may have to pay 9 percent service tax for using communication service if the Communication Tax Bill before the Senate is passed by the two chambers and approved by President Muhammadu Buhari.

The new Bill entitled ‘Communication Tax Bill, 2019 (SB.12)’ was sponsored by Senator Ali Ndume, Chairman of the Senate Committee on Army.

It passed the first reading at plenary Wednesday and will now go for a second reading before being referred to the appropriate committee for additional legislative action.

According to Ali Ndume, the new communication tax is meant to replace the 2.2 percent increase in Value Added Tax being pushed by the ministry of finance.

The proposed bill reads in part:

“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.”

It also stated that “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.”

According to the Bill, Tax shall be levied on Electronic Communication Services like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as Pay per View TV Stations,

If passed, “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 authorized provide Electronic Communication Services.”