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VAT haul from telecom subscribers doubles to N412bn

VAT haul from telecom subscribers doubles to N412bn

Telecommunication subscribers and other consumers of information and communications services in Nigeria paid N412.31 billion in Value Added Tax (VAT) last year.

This is as telecom companies and other operators in the information and communications industry paid N466.5 billion in Company Income Tax (CIT), data from the National Bureau of Statistics (NBS) revealed.

The telecoms sector continues to be one of the largest contributors to the government’s tax revenue because of its role in the economy. Data from the NBS shows that the sector contributed 19.29 percent, 21.19 percent, 19.04 percent, and 10.02 percent in the first quarter, Q2, Q3, and Q4 respectively.

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The information and communications sector was also one of the top contributors to CIT. In the first three quarters of 2023, of the total amount of CIT paid, ICT contributed 11.89 percent, 20.30 percent and 11.86 percent, respectively.

The growth in VAT revenues underscores increased consumption of telecom services, with data usage soaring to 713,200 terabytes (TB) as of December 2023 from 517,670 TB in January, for instance. The increased reliance on digital services also translated into higher revenues for the telcos. MTN’s service revenue grew by 22.4 percent to N2.5 trillion in 2023 and Airtel recorded $1.24 billion in revenue for the nine-month period ended December 2023.

According to the NBS, the information and communication sector comprises the activities of telecommunications and information services; publishing; motion picture, sound recording and music production; and broadcasting.

The telecom sector is a major component (about 80 percent) of the ICT sector. The ICT sector is one of the major pillars of the country’s GDP and a major source of revenue in the form of taxes for the government.

Commenting on the impact of the information and communication sector (to which telecoms contributed 83.69 percent) on the country’s nominal GDP, the NBS said: “On an annual basis, the sector grew by 40.79 percent, higher than 19.00 percent in 2022. The information and communications sector contributed 12.52 percent to the total nominal GDP in the 2023 fourth quarter, higher than the rate of 10.42 percent recorded in the same quarter of 2022.”

In 2021, the Federal Inland Revenue Service (FIRS) listed MTN Nigeria, one of the four mobile network operators in the country, as one of its top taxpayers.

A statement signed by Uto Ukpanah, its company secretary, said: “In 2021, MTN Nigeria’s total tax contribution to all government agencies, including the FIRS, amounted to N757.6 billion while the FIRS collected a total of N6.4 trillion tax revenue in the year.

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“Specifically, MTN Nigeria paid a total of N618.7 billion in direct and indirect taxes to the FIRS in the 2021 tax year, representing approximately 13.5 percent of the total FIRS collection for the year.”

Recently, Bosun Tijani, minister for communications, innovation, and digital economy, said he hoped to increase the federal government’s annual net revenue from the telecommunications sector by 100 percent between 2023 and 2027.