Nigeria’s over 184 million mobile subscribers and over 90 percent of its population who access the internet through mobile phones are not left out of the increase in tariff following the signing of the Finance Bill by President Muhammadu Buhari in January, as telecommunications operators on February 1, 2020, started the implementation of the new 7.5 percent Value Added Tax (VAT), up from 5 percent.
The service providers in the industry through the Association of Licensed Telecommunications Operators of Nigeria (ALTON) have notified subscribers across all the networks of the new rates, and assured Nigerians that the implementation of the new VAT will not negatively affect the transparency of tariff and quality of service.
Read also: Nigeria targets N252bn from privatisation in 2020, says finance minister
They assured that an increase of 2.5 percentage points “is not enough to cause significant harm on telecoms services. It is not that a N1,000 call credit voucher will now cost N1,200, but that the call volume and data volume will be slightly reduced rather than having an increase in price,” BusinessDay gathered from a source in the telecom industry.
According to the source, “Nigeria still pays one of the lowest VAT in Africa. Some other countries pay up to 15-20 percent as VAT.”
Gbenga Adebayo, chairman, ALTON, said that “further to the assent of the Finance Bill by President Muhammadu Buhari, which reviewed VAT from 5 percent to 7.5 percent, ALTON wishes to notify consumers that our members will begin applying the new VAT rate on all purchased telecommunication products and services with effect from February 1, 2020.
The federal government of Nigeria insists that the new Finance Law is “specially designed to create a truly enabling environment for business and investment by the private sector”.
The new law is part of Nigeria’s plan to reform its taxation regulations, and align the country’s tax regime with global best practices in a way that will support micro, small and medium scale enterprises (MSMEs), in accordance with the government’s economic reforms and ‘Ease of Doing Business’.
