Again ALTON kicks against Telecoms services tax

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(Last Updated On: 2016-09-08)

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The Association of Licensed Telecoms Operators of Nigeria (ALTON) has taken a position on the proposed Communications Service Tax (CST), which is presently at the Committee for Telecommunications in the House of Representatives for review.

The national umbrella of all licensed telecommunications operators said the introduction and collection of the CST without the exclusion of the applicability of the Value Added Tax (VAT), which is also applicable to services rendered by Service Providers in the telecommunication sector will amount to double/multiple taxation.

ALTON added that it is also not clear why the tax is focused majorly on the telecommunications industry, especially as it is already exposed to various levels of taxation like the Company Income Tax, NITDA Levy, Education Tax, Annual Operating Levy on Net Revenue and VAT on consumption of services.

Engr. Gbenga Adebayo, President of ALTON said,  “As a body representing the interest of all licensed telecom operators in Nigeria, we are worried about the introduction and collection of the CST without the exclusion of the Value Added Tax. This, to us, is double taxation capable of eroding the growth of the industry,” ALTON said in a document titled ‘ALTON Review of an Act to Provide for the Establishment of Communications Service Tax and for Matters Connected’.

The document, which was made available to Journalists via email cautioned that the general effect of the CST is that the tax burden would be increased, not just for the consumers but also on the service providers as telecommunications services will become more expensive.

The Telecommunications Service Tax is being ponsored by Hon. Saheed Akinade-Fijabi and Hon. Bede Uchenna and co-sponsored by the Telecommunications Committee of the House of Representatives. It has been sent to the Committee for Telecommunications in the House of Representatives for review.

It will be levied on service fees payable by users of electronic communication services at 9% of the charge for the service and will be borne by the customers. If the Bill is enacted into law, it will mandate service providers to file monthly tax returns with the FIRS with strict penalties for non-compliance.

The categories of communication services liable to the tax include voice calls, SMS, MMS, Data and Pay TV and users of Electronic Communication Service [any communication through use of wire, radio, optical or electromagnetic transmission emissions or receiving system.

The direct implication of the bill is that the total service cost of usage for the consumer will increase to accommodate 9 per cent CST for the service, which now brings to question if the price cap of N50 that the NCC has set for retail voice services is exclusive of taxes.

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