Nigeria’s ATCON: Proposed Communication Tax dialling ‘wrong signal’

Telecoms

The Association of Telecoms Companies of Nigeria (ATCON) says that a 9% taxation in the proposed Communications Tax Bill before Federal lawmakers will send a wrong signals to investors in the Nigerian technology market.

    “As we all know that Nigerian telecoms subscribers are already paying tax because VAT is embedded in calls made and data consumed. If the bill sails through it would reduce the subscribers’ consumption of data and reduce length of a voice call, this will result in drop in revenue that would accrue to telecoms operators which will in turn reduce the contribution of the sector to our GDP.”

ATCON, the pressure group of telecoms companies in the country says that the proposed law will also create disinvestment in Nigeria’s vibrant telecoms industry.

Olusola Teniola, President of ATCON, says that indications from the National Assembly  to enact the communication tax bill  may send negative signals to the investors hoping to explore emerging broadband stakes following the success of mobile voice driven by incumbent operators in Nigeria.

This was one of the key highlight at the Communication Service Tax Stakeholders’ Forum, organised Wednesday by the Lagos Chamber of Commerce and Industry (LCCI) in Lagos.

“Our policies must continue to be investment friendly. It has been established that revenue from voice is still significant and it must be stressed here that the investment that is required to deepen the penetration of Broadband in Nigeria is much greater than the one we used to provide voice telephony. In view of this, the said Communications Service Tax bill should be stepped down so as to encourage investors and make the sector more attractive for foreign direct investors”, the ATCON president told attendees at the forum.

According to him “ATCON is working with other relevant agencies to increase the Foreign Direct Investment to the sector which is highly capital intensive. This cannot be achieved if the government is considering introducing Communications Services Tax, which will deter further investments to be made.”

The ATCON President says the multi-billion telecoms sector investors have deepened investments and transformed every facet of the economy, hence content of the Bill will not only stifle the growth of the telecom industry but also destroy the stellar achievements of the sector since it was liberated.

“As we all know that Nigerian telecoms subscribers are already paying tax because VAT is embedded in calls made and data consumed. If the bill sails through it would reduce the subscribers’ consumption of data and reduce length of a voice call, this will result in drop in revenue that would accrue to telecoms operators which will in turn reduce the contribution of the sector to our GDP.”

“The Return on Investment (ROI) would be badly affected as a result of the above illustrations. Nigeria as a nation needs a lot of investible funds to build infrastructural facilities and provide employment for her teeming population and especially our growing youth. As we know that Nigeria’ telecom industry still needs circa 50,000 base stations to be able to improve on Quality of Service and to reach the un-served and underserved parts of the nation,” he adds.

He also says that the perceived benefits of imposing Tax on telecoms subscribers are far lower than the revenue that it is going to create for the government.

“ATCON believes any calculated actions that have potentials to stifle further contribution of the telecoms industry to our GDP must be avoided by all tiers of government in Nigeria as the perceived benefits of imposing a Communication Service tax on telecoms subscribers has the potential to erode if not destroy the achievements that have been made since the telecoms sector was liberated. We therefore advise both the House of Representatives and the Senate to discontinue with the bill,” The ATCON told the forum that attracted key players in the ICT industry.”

Teniola explain further that communication tax  bill is “unnecessary and prohibitive”, adding that  the operators in the sectors are already faced with multiplicity of taxation and might lead to increase in unemployment, decrease in revenue accruable to government which would heighten the county’s poverty level.”

He described the proposed bill as “a clog in the wheel of roll out of broadband services for the development of the nation-Nigeria. It means that telecommunications services would not be available in some state of the federation.”

The ATCON president  also noted that “the high taxation takes so much away from both the telecoms operators and subscribers that little or nothing is left to run the business. If government tries to boost the economy with increased government spending, the result is stagflation (simultaneous high inflation and unemployment) instead of prosperity. The only cure for stagflation is to cut both taxes and government spending.”
Source: Technology Times