Business

Telcos, others pay N51bn income tax in Q4

Sector’s payment declines

Telecommunications companies and other firms in the Information and Communication sector in the country paid a total of N51 billion as Company Income Tax (CIT) in the last quarter of 2021, New Telegraph has learnt. The payment by companies in the sector came as the highest by any sector in the period under review, thus boosting government’s revenue. However, according to the data released by the National Bureau of Statistics (NBS), the Q4 figure showed a decline in tax payments by companies in the sector when compared with the preceding quarter.

CIT from the sector stood at N53.4 billion in Q3 2021, which made the Q4 payment a 4.4 per cent decline. Year-on-year, the sector’s CIT payment increased significantly. In Q4 2020, CIT from the sector stood at N32 billion. Hence, the N51 billion recorded in Q4 2021 represents a 59 per cent increase.

According to the NBS report, the company income tax from the information and communication firms represented 19.7 per cent of the total CIT paid locally to government in the three-month, which stood at N258.85 billion. 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 a recently 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 of 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. The Nigerian Communications Commission (NCC), in a recent report on multiple taxations in the telecommunications sector, had also noted that there are over 40 different taxes and levies meted out upon the Mobile Network Operators (MNOs) carrying out telecoms services in Nigeria. “Although these taxes serve as critical sources of revenue for the various tiers of government in Nigeria, there are nonetheless severe national consequences of over-taxation. Over taxation limits the prospects of the rollout of a national digital economy’s because it impedes network expansion efforts by telecoms operators and hinders further build-out advancements and investments. It also limits operator efforts at mobile penetration and digital inclusion as some of these taxes are being passed to consumers,” it stated.

 

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