Telcos Reject New Tax on Electronic Communications Services

Emma Okonji

Telecommunication companies (Telcos) have collectively rejected fresh plans by the National Assembly to introduce a bill that will promote a new tax on electronic communications services, targeted at operators and their subscribers.

The Association of Licensed Telecommunication Operators of Nigeria (ALTON), the Association of Telecoms Companies of Nigeria (ATCON) and the National Association of Telecommunications Subscribers (NATCOMS), in a joint statement, condemned the planned hike in telecoms tariffs and called on the Minister of Communications, Adebayo Shittu and the Minister of Finance, Mrs. Kemi Adeosun, to intervene quickly to prevent the adoption of the new tax on electronic communications services, as planned by National Assembly.

Chairman of ALTON, Gbenga Adebayo, President of ATCON, Lanre Ajayi, and National President of NATCOMS, Chief Deolu Ogunbanjo, in a joint statement, condemned the planned hike, explaining that it will increase the amount of taxes currently being paid by telecoms operators.

The GSM Association (GSMA), the industry association representing mobile operators worldwide, has also joined forces to condemn the plan.

The proposed tax is to be levied on charges payable by users of electronic communication service, which include any communication through the use of wire, radio, optical or electromagnetic transmission emissions or receiving system or part of these and include interconnection at nine per cent of the charge for the service. The specific services highlighted are voice calls, SMS, MMS, Data, TV viewing, even though they do not seem to be exclusive.

The bill, which is sponsored by Senator Ali Ndume, who is a principal officer of the Senate, has already gone through first reading at both chambers, awaiting the second reading.

According to telecoms operators, the proposed bill will require a number of clarifications. It is necessary to know if the bill will replace the existing VAT charges. If not it means the consumers will be made to pay to government 15 per cent more on present tariff, and this is not fair to our consumers.

They said if introduced, it would result in an increase in prices for consumers, have adverse impacts on the adoption of mobile services and industry investment, and be counter-productive to the longer term national digital strategy objectives set by the government of Nigeria.

They are of the view that further taxation on electronic communication services would hit lower income consumers the most, who are already struggling due to the adverse economic situation and increased price pressure and for whom affordable access to information and communication technology is critical to their social and economic inclusion.

Considering the negative impact on mobile industry investment, telecoms operators said the proposed tax would have adverse effect on the industry investment needed to improve and expand mobile connectivity across the country.

“Mobile industry investment in Nigeria is already constrained by multiple level of taxes and fees set by local and regional authorities, in addition to fees to the national telecommunications regulator and high costs of right of ways. In a context of declining average revenue per user, this can make it more difficult for mobile operators to make a business case for investment,” the operators said.