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Friday, April 08, 2016

Breaking News: GSMA, ALTON, ATCON, NATCOMS reject plan to tax e-Services in Nigeria

The Global System for Mobile Association (GSMA) has led a joint petition with the Association of Licensed Telecom Operators of Nigeria (ALTON), the Association of Telecoms Companies of Nigeria (ATCON) and National Association of Telecoms Subscribers (NATCOMS) against the proposed 9 per cent Communication Services Tax to be levied on charges payable by end-users of an electronic communication services in Nigeria, reports ITRealms.

Whereas GSMA is the industry association for mobile operators worldwide; ALTON, is for mobile operators of Nigeria; ATCON is for other associated telecom companies, and NATCOMS represents telecom consumers; jointly expressed dismay regarding the proposal, under consideration by the National Assembly, to establish a 9 per cent Communication Service Tax to be levied on charges payable by a user of an electronic communication service, for instance on Short Messaging Service (SMS), voice calls, MMS, data usage among others supplied by service providers.

In a strongly worded petition entitled Objection to the Proposed Bill for the Establishment of a Tax on Electronic Communication Services in Nigeria addressed to the duo of Nigerian Finance Minister, Mrs Kemi Adeosun and her counterpart in Communications, Barr. Adebayo Shittu, the four telecommunications interest groups jointly rejected the proposed plan by the government to tax electronic communication services in the country.

A copy of the petition obtained by ITRealms, revealed that Mortimer Hope, Director Africa of GSMA, Engr. Gbenga Adebayo, chairman of ALTON, Engr. Lanre Ajayi, President of ATCON and Chief Adeolu Ogunbanjo, the national president of NATCOMS signed for their respective organisations.

ITRealms also reported that the petition which was copied to the Executive Vice Chairman, Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, Senate President, Dr. Olubukola Saraki and the Speaker, House of Representatives, Hon. Dogara Yakubu among others, insisted that if this tax proposal is accomplished, it will not only increase prices for consumers, but stifles further investment in a market already battling multiple taxation.

“If introduced, such tax will result in an increase in prices for consumers, have adverse impacts on the adoption of mobile services and industry investment, and be counter-productive to the longer term national digital strategy objectives set by the Government of Nigeria,” the groups said.

According them, the bill tends to increase affordability barriers to the uptake of mobile services in the country.

They quoted a recent World Bank report which showed that a 10 per cent increase in mobile broadband penetration in low to middle income countries leads to a 1.38 per cent increase in Gross Domestic Product (GDP) growth.

They also pointed out that as at March 30, 2016, Nigeria has 83 million people with access to mobile services, lamenting that over half of the population are still without a mobile connection, while affordability remains a key challenge to connect the unconnected, who are typically lower income population groups.

“Further taxation on electronic communication services will hit lower income consumers the most, who are already struggling due to the adverse economic situation and increased price pressure and for whom affordable access to information and communication technology is critical to their social and economic inclusion," the petitioners lamented, stressing that this will result in a double taxation for consumers who already pay Value Added Taxes (VAT) on telecommunications services.

The quadruple interest group argued that the proposal would also further increase the administrative cost burden on service providers to comply with numerous and complex tax regulations, already high compared to other countries of the world.


They, therefore, requested of both Ministers to urgently intervene to prevent the adoption of a new tax on electronic communications services to ensure that digital economy delivers its full potential in Nigeria and for Nigerians.

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