Subscribers to pay 21.5% taxes on GSM calls

A tax expert Taiwo Oyedele has warned against the imposition of excessive taxation on the telecom sector, saying it could be counterproductive.

Oyedele, who is the Fiscal Policy Partner and Africa Tax Leader, PricewaterhouseCoopers, said the telecom sector, through its infrastructure, is an enabler for other sectors of the economy and should not be overburdened with excessive taxation.

He averred that with Value Added Tax (VAT) at 7.5 per cent, which took effect from February 2020 via the Finance Act 2019, the total tax on GSM calls is 21.5 per cent.

“With the recently passed National Health Insurance Authority Act 2022 imposing a telecom levy on calls, the 2022 Fiscal Policy Measures and Tariff Amendments imposing an excise tax on pre/postpaid services, in addition to the current VAT at 7.5 per cent, which took effect from February 2020 via the Finance Act 2019, the total tax on GSM calls is now 21.5 per cent VAT 7.5 per cent; Excise tax five per cent; and Healthcare levy nine per cent – totalling 21.5 per cent

“This is a tax increase of over 300 per cent from just VAT at five per cent about two years ago. The telecom sector is an enabler for other sectors of the economy. It is important to avoid excessive taxation which may directly hamper the sector and indirectly hurt other sectors and the economy as a whole,” he posted on his Linkedin page yesterday.

The President, National Association of Telecom Subscriber (NATCOM), Chief Deolu Ogunbanjo, said the tax was uncalled for, wondering why the Federal Government is always seeking to increase the yoke of the telecom sector which is currently grappling with over 40 taxes and levies, both legal and illegal.

He said, “This is really unfortunate. The government should not do this at this time when the value of the naira is almost worthless. Implementing the tax is tantamount to indirectly making more Nigerians vulnerable. Why didn’t the government make provision for this in the national budget?”

Similarly, another subscriber group, the Association of Telephone, Cable Tv and Internet Subscribers (ATCIS), have rejected the tax

Its President, Sina Bilesanmi, said, “This is totally unacceptable to us. We reject the new tax. We may resort to litigation if moral suasion fails on this matter. Where is our country heading to? We urge the Federal Government to stop this unwanted heavy burden on our members that have not been enjoying quality services that commensurates with what our members pay.”  (The Nation)