New Telegraph

Telcos, others pay N130bn income tax

Telecommunications companies and other firms rendering professional services in the country paid a total of N130 billion as Company Income Tax (CIT) in the second quarter of this year. This is according to the data released by the National Bureau of Statistics (NBS). Driven largely by telecom companies, the amount paid by firms in this sector represented the highest paid by any sector in the period under review.

While the tax figures for other telecom companies were not made public, MTN Nigeria, in its Q2 financial results, declared it paid N44 billion as tax in the period. According to the NBS report, the company income tax from telecoms and professional ser-vices represented 31 per cent of the total CIT paid locally to government in the three-month, which stood at N417.7 billion.

The Q2 CIT from the sector also showed a significant increase compared to the previous quarter. In Q1, CIT from the sector stood at 18 billion, thus the Q2 figure showed a 615.97per cent growth. Year-on-year, the sector’s tax contribution also increased by 103.9 per cent from N63.8 billion recorded in Q2’20. Amidst complaints about the issue of multiple taxations in the telecoms sector, the immediate past President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Olusola Teniola, had recently disclosed that the telcos pay a total of N450 billion annually as taxes to government.

This disclosure came on the heels of the proposed nine per cent Communications Service Tax on telecommunications services. While the proposed tax is to be paid directly by the consumers of telecommunications services and not part of taxes to be paid by the operators, an expected change in the pattern of consumption is bound to hit the operators’ earnings.

“Telcos collectively pay N450 billion annually to government as tax and I say this conservatively. If everything works well in the sector, the amount is bound to increase as operators generate more revenue. But with the nine per cent tax being proposed, communications will be out of reach for many Nigerians and the operators will lose revenue, which will also affect the tax being paid to government from their earnings,” he said.

“If the bill becomes law, there will be a huge impact on revenue and the tax payable by the telcos will reduce and may eventually lead to loss of jobs,” Teniola added. He noted that the operators are currently dealing with 39 different taxes that apply to telecommunications operations and, which also add to the cost of the services for the consumers. He advised government to look at ways of reducing the cost of governance in the country rather than imposing more taxes on the people. Meanwhile, the global coalition for cheap internet access, Alliance for Affordable Internet (A4AI) has also advised the Nigerian government not to pass its Communication Service Tax (CST) Bill into law. The body, in its review of the bill, said the nine per cent tax being proposed on communication services would jeopardise the country’s target of 70 per cent broadband penetration by 2025. While telecom operators in the country had also condemned the bill, saying it would lead to an increase in the cost of data and voice call for the subscribers, A4AI in its report of an assessment of the bill said: “CST Bill might impede telecoms service delivery to the people, and also likely to negatively affect increased broadband penetration as a result of increased charges. “The CST will effectively increase the cost of operations for all such businesses. The affected services will either become more expensive for consumers, or the providers will charge the same rates, while absorbing the tax, as was the situation in Ghana until last month,” it added.

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