More worries for telecoms subscribers as FG plans 5% duty on recharge cards

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While Nigerians have yet to adjust to telecoms operators’ planned 40% hike in tariffs, it appears that more pain will be inflicted in the coming days, as the Federal Government has approved the collection of a 5% excise duty on telephone recharge cards and vouchers, according to the report.

President Muhammadu Buhari, according to reports, issued the order.

In a letter to the Nigerian Communications Commission (NCC), the Association of Licensed Telecoms Operators of Nigeria (ALTON) claimed that economic challenges, rising energy costs, and the Russia/Ukraine war, among other things, forced them to raise the cost of calls, SMS, and data.

According to ALTON’s proposal, the call price floor will rise from N6.4 to N8.95, while the SMS price cap will rise from N4 to N5.61.

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According to TheCable, the 5% charge is one of the new items on the list of goods subject to excise duty in the country’s Finance Act.

Excise duty is a tax imposed at the time of production. It’s also a type of indirect tax on the sale or consumption of certain goods, products, services, or activities like tobacco, alcohol, narcotics, gambling, and so on, with the goal of discouraging their use and consumption. The list has been expanded by Nigeria’s Finance Act to include beverages and non-alcoholic drinks, among other things.

According to the report, the Minister of Finance, Budget, and National Planning, Zainab Ahmed, issued a circular instructing Nigerian Customs to establish a tariff line for the collection of excise on mobile phones, electricity metres (components), and set-up boxes at 5%.

The duty is expected to bring in at least N150 billion for the federal government, while customs will pocket about N10 billion as a 7% collection fee.

The circular follows a customs list of excisable items, which includes telephone recharge cards and vouchers, which are taxed at 5%.

The collection was also said to be part of new provisions in President Buhari’s 2020 Finance Act. Although no rate was specified, it is clear that the President could have authorised the collection of the duty at 5%, as the Act allows.

According to Kehinde Aluko, a telecoms expert, determining telecoms tariffs is a process that takes time. “Consultants will be contacted, and the process may take up to a year.” The current tariff that they are using has gone through that process. So, even if their demand is taken into account, it will go through a process that will not encourage immediate implementation.”

“I believe telcos can still manage, despite the country’s challenges necessitating so many drastic situations.” They continue to declare massive profits. Instead of raising tariffs, I believe they should look into other avenues for increasing revenue.”

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When contacted by NCC to confirm this, a senior official who requested anonymity said the commission could not confirm it, “but such may be in the pipeline.”

“But I don’t know how far they have gone,” a senior ALTON official said, adding that the Nigerian Customs Service had been directed to come up with excise duty on some telecoms products and services. I’ll double-check and get back to you.”

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