The National President of NATCOMS, Adeolu Ogunbanjo disclosed that the suit which has been filed at the Federal High Court Ikoyi is against the imposition and implementation of excise duty, and the continued imposition and implementation of Value Added Tax on telecom services.
Ogunbanjo, who disclosed this to the Punch, said “There are too many taxes on telecom service. Putting too many taxes on it is not fair. When you buy airtime, you pay VAT. Why are we still paying VAT for the services.”
The suit which was filed is praying the court to cancel VAT on telecom services, declaring it unconstitutional and illegal and nullifying the implementation of excise duty on telecoms as null and void.
The suit reads “A declaration that the imposition and implementation of Value Added Tax on telecommunication services, as taxable services by Section 2 of the VAT ACT as amended, by the 7th – 9th Defendants and the imposition and implementation of Excise Duty on telecommunication services by Section 21(2) of the Excise Act as amended by Section 37 of the Finance ACT, by the 7th – 10th Defendants amount to double taxation on the plaintiff’s members, who are telecommunication services consumers or subscribers in Nigeria, and therefore unconstitutional, illegal, unfair and null and void.”
The suit also listed the Attorney General of the Federation, the Minister of Finance, Budget and National Planning, the Federal Inland Revenue Service, and the Nigerian Customs Service Board among the defendants.
The 5% excise duty tax on telecom services was announced by the Federal Government in July and according to the Minister for Finance Budget and National Planning, Zainab Ahmed, the tax will boost the government’s revenue.
While speaking through the assistant Chief Officer of the ministry, Mr. Frank Oshanipin, at an event organized by the NCC, the Minister addressed the tax and excise duties saying “The duty rate was not captured in the Act because it is the responsibility of the President to fix rate on excise duties and he has fixed five per cent for telecommunication services which include GSM.
“It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue. The responsibility of generating revenue to run government lies with us all.”
Also, in August, NATCOMS challenged the legitimacy of the proposed excise duty on telecoms service and disclosed it would be going to court. The telecom body also argued that, at that time, the tax introduced on telecom services implied that consumers would be paying a 12.5% consumption tax despite the weakening purchasing power.
This led to the Federal Government announcing a suspension of implementing the excise duty on telecom services, which was disclosed by the Minister of Communications and Digital Economy, Isa Pantami, who said, “Excessive taxation has been a central challenge of the Information and Communications Technology sector.”
However, according to a document released by the House of Representative Committee on Finance, titled ‘Invitation to a One Day Public Hearing and Submission of Memoranda on the 2022 Finance Bill,’, it is believed that the federal government may reconsider implementing the excise duty on telecom services.
According to the document, which reads “Telecommunication services provided in Nigeria shall be charged with duties of excise at the rates specified under the duty column in the Schedule as the President may by Order prescribe pursuant to section 13 of this Act.”
Is implementing the new excise duty on the telecommunication sector the next best thing to do considering the current state of the economy?
What are your thoughts?