Nigeria: Telecom kick-off as authorities considers airtime excise tax

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The federal government has presented a new plan to introduce an excise tax on mobile phone charges for telecommunications.

A Reuters report yesterday said Nigeria was considering introducing an excise tax on telecom charges in an effort to boost revenue for the deprived nation.

The report quoted the Director General of the Federation Budget Office, Mr. Ben Akabueze, as he unveiled the plan at a World Bank event at which the need for the federal government to raise additional revenue was discussed.

“Last year we found that 51 countries in Africa have an excise tax on broadcasting fees, so we are looking into this as well as an area that needs to be taxed,” he said.

But in a quick response, telecommunications companies under the aegis of the Association of Licensed Telecoms of Nigeria (ALTON) have opposed the new plan, saying it will lead to double taxation, which has slowed telecommunications growth in the past.

In response to the statement attributed to Akabueze, ALTON chairman Mr. Gbenga Adebayo said that since the purpose for the proposed imposition of an excise tax on telecommunications charges is not clear to industry players, telecom operators would rather wait and see how the federal government intends to impose an excise tax on the Introduce charging by airtime.

He explained that the proposed tax is equivalent to double taxation as a value added tax (VAT) will be charged on all telecommunications call time top-ups.

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He said, “Telecom operators don’t understand why the federal government wants to impose an excise tax on topping up telecom talk time. The excise duty is introduced on manufactured goods and is introduced when the government wishes to reduce the intake of such manufactured goods. Except that the federal government wants to prevent top-up cards from being imported into Nigeria to encourage telecom operators to use alternative ways to sell airtime, such as virtual top-up that doesn’t require a physical top-up card.

“It is understandable, for example, when the federal government decides to impose an excise tax on tobacco products because it wants to reduce tobacco use in Nigeria because of the health effects, but it is out of place for the government to impose an excise tax on telecommunications airtime introduce.”

He added that the telecommunications sector remains the only sector that has not increased service and call charges since the Global System for Mobile Communications (GSM) was launched, and warned that any attempt to impose an excise duty on the Introducing charging of telecommunications calls would negatively impact telecommunications service offerings across networks.

“The government should be careful not to impose any additional burden on telecommunications operators,” Adebayo said.