ATCON Reject Proposed 9% Communications Service Tax

Fri, Nov 11, 2016
By publisher
4 MIN READ

Business

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THE Association of Telecommunications Companies of Nigeria, ATCON, warns that nine percent communications service tax will deny 20M Nigerians access to telecoms Services

Passing into law the nine percent Communications Service Tax bill currently before the Senate can stop 20 million Nigerians from having access to telecommunications services. This is why the Association of Telecommunications Companies of Nigeria, ATCON, umbrella body of telecom companies in the country, is proposing a one percent communication tax instead.

The ATCON, in a letter to Bukola Saraki, President of the Senate, signed by Olusola Teniola, president,   ATCON,   said   it   would   continue   to   kick   against   the   proposed   nine   percent Communication Service Tax Bill, until its reviewed down to one percent.

Teniola holds the view that government’s the desire to widen the tax net was laudable but as things stand, telecommunications industry was about one of the few areas where the net-capture could be widened. “We, therefore, suggest that an increase in VAT tax, which is already included in all services of telecommunications by an increase that is not beyond one percent, should be a good reform strategy.”

Basing his suggestions on the input of recent studies by credible organisations, he said: “The projections are that a new tax on the ICT services as high as nine percent that is being proposed will result in excluding 10 percent of the population, that is talking of about 20 million Nigerians from access; whereas, the survival of our economy is on attracting more citizens to have access to Internet and therefore ICT services.

“It does not add up if whatever we do ends up not bringing more people into access. The reality of Internet access in Nigeria is that it is all about mobile. Only about 13 per cent of Nigerians get broadband access via mobile while less than one per cent of the people do so from fixed services,” he said.

He stated that one of the main reasons the rate of Internet adoption and use was rather slow in Nigeria was the high cost of data subscription.  For instance, a 500MB plan costs typically 5.4 percent of average monthly income. The current definition of affordability used by the United Nations Broadband Commission is where the price of a broadband plan is less than five percent of average monthly income. If we are to use this definition, Nigeria is on the cusp of affordability.

In Nigeria, the average income in 2014 was $2970 (GNI per capita, source: World Bank), 40 percent of the population actually earned less than half that amount. In practice, this means that a 500MB mobile Internet plan priced at 5.4 per cent of average monthly income actually costs the majority of Nigerians anywhere between seven per cent and 18 per cent of monthly income.

Teniola, however, said ATCON would be happy to support the government to make the best of the tax efforts, saying they were certainly key components of strengthening the economy and sustaining the industry. “Our mandate is to support the federal government to succeed in attracting and protecting investments   in   the   telecommunications   industry   and   to   make meaningful   input   to   all   aspects   of   economic   development,   including   legislation   and management of our industry, so it continues to be the oil of growth and development.

 “No doubt, there is severe pressure at this time and government revenue cannot be different. We, however, pray that the template with which the telecoms industry is viewed and assessed be slightly modified. The truth is that there is severe over taxation in our industry. It explains the slow penetration of services into ‘unserved’ areas of the country. The truth again is that contrary to popular belief, telecommunication operators and service providers are barely sustaining existence in these times,” he said.

— Nov 21, 2016 @ 01:00 GMT

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