• Friday, March 29, 2024
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Nigeria telecom operators want review, harmonisation of 39 taxes, charges on sector

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Telecommunication operators have said it is counterproductive to overburden the sector with about 39 taxes and levies, thereby limiting the capital required to upgrade broadband infrastructure across Nigeria and adding to other cost pressures the industry already has. In view of that, there is a need to review and harmonise the tax environment in the country.

The operators were speaking on Friday at the Tax Conference themed ‘Fast-tracking Economic Recovery through Robust Tax Policies and Practices’ and organised by the Telecommunication and Technology Sustainability Working Group (TTSWG) and BusinessDay.

Taiwo Oyedele, Head of Tax, PricewaterhouseCoopers noted that in view of the strategic importance of the ICT sector in driving the digital economy, there is a need for reforms in Nigeria’s taxation system with the objective to encourage investors to continue to invest in the various sectors.

The sector currently contributes about N14 trillion – 10 percent of the GDP – to the Nigerian economy. The sector’s importance became even more pronounced during the COVID-19 pandemic where it emerged as the sector sustaining the operation of different industries, ensuring that there is business continuity.

“One of the things we have to do is getting the right people to pay tax,” Oyedele said.

He also noted that the focus on people at the lower end of the society, industries that are visible, while leaving others not paying their fair share of taxes have to be addressed with the use of technology. Kaduna State government introduced technology and were able to increase their IGR of N13 billion to over N44 billion within the period of two years.

Matthew Olusanya Gbonjubola, director, Tax Policy & Advisory Department, FIRS, said the situation in which the country’s revenue depended on the commodities market was abnormal whereas in other countries the basic source of revenue for the government is taxation. The country has largely neglected its tax revenues. This is why the country has been unable to review its tax legislation for many years with a view to bringing them up to date with current realities. The pandemic, therefore, was a blessing in disguise because it opened the eyes of the authorities to source revenue in a sustainable way.

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“We have to do a delicate balancing and we are still doing so today,” Gbonjubola said. However, the government is in serious search for new revenue sources to fund the 2021 budget and it is also aware that there is a limit to which it can continue to borrow. Even the FIRS got involved in providing palliatives during the lockdown.

Olusolsa Teniola, President of the Association of Telecommunications Operators of Nigeria (ATCON) said that while it is not out of place for operators to pay taxes – because they are law-abiding – multiple taxations is one of the biggest obstacles limiting capital deployment in the industry.

Teniola said the focus should be on taxing the outcome. The companies and entities that are carrying the tax burden are in the formal sector of the economy because they are the most visible ones and they should not be overburdened with tax without expanding the tax base.

“There should be consideration for the harmonisation of the multiple taxes – about 39 taxes and levies, and charges, indiscriminately applied to our industry,” Teniola said. Harmonisation would aid the planning for capital expenditure programmes that are very capital intensive in terms of the industry. Lack of review would continue to fester uncertainty operators have in policy decisions.

For Teniola, a proper approach would be to sit down and have a dialogue with policymakers to understand what are those taxes that are not applicable to the sector. For the ones that the industry is already paying, there should be a review to consider how to harmonise.

Oyedele recommended that the 39 taxes be streamlined to 5. According to him, creating multiple taxes that are not tied to any specific benefit often creates loopholes for corruption and the government ends up not getting much from them. However, when there are lesser taxes tied to specific benefits or incentives, the industry is happy to oblige and the government makes more money.

Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) said the misconception during the pandemic lockdown was the authorities’ fixation on the revenue made by the operators without identifying with the cost pressures the industry carried throughout the period. Operators were able to sustain their operation as well as other businesses across the country without downtime which cost them a lot of money and personnel to achieve.

“Telecom has become the critical infrastructure to any economy,” Adebayo said.

Teju Somorin, dean, College of Post-Graduate Studies, Caleb University also recommended the simplification of tax laws. She observed that the wordings of the Stamp Duty Act is technical. Tax laws, she said, are supposed to be easily understood by everyone, especially by the companies and individuals whom it will affect.