Telecommunication service providers in Nigeria have announced an impending increase in customer tariffs for calls and data.
The anticipated rise is attributed to the Federal Government’s proposed 12.5% value-added tax on telecommunications, which would represent a 66.67% increase from the current 7.5%.
According to telecom operators, the increase in tax would force them to also increase the tariff charged for consumers’ calls and data.
The Global System for Mobile Communications (GSMA), a non-profit organisation representing the interests of mobile network operators worldwide stated that Nigeria’s telecom industry is already overtaxed. Therefore, any increase in the tax rate would impact customer tariffs.
GSMA declared that the telecommunication industry pays over 50 different taxes to various government arms.
This tax increase is in line with the new Bill reform, which imposes excise duties on technology and consumer services industries, including telecommunications, gaming, gambling, lotteries, and betting services.
As part of a broader tax reform initiative, the proposed Bill aims to unify the fiscal legislation governing taxation in the country.
“A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters,” the Bill read.
“Services, including telecommunications, gaming, gambling, betting, and lotteries however described, provided in Nigeria shall be charged with duties of excise at the rates specified under the Tenth Schedule to this Act in a manner as may be prescribed by the Service,” the Bill outlined.
“Amount of an excisable transaction is the amount chargeable for the service by the service provider, both in money or money’s worth,” the Bill indicated
In response to the proposed tax reform, the President of the National Association of Telecoms Subscribers, Adeolu Ogunbanjo, expressed concern that the government’s proposal could cripple the telecommunications industry.
“They are essentially trying to kill the industry by imposing more burdens on it,” he stated