Consumers to pay higher taxes on telecom services

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A new legislation that would make consumers of telecom services pay additional tax is in the making at the National Assembly.
The Bill, titled ‘Communication Service Tax Bill (“CST” or the “Bill”) 2015’, seeks to impose, charge and collect Communication Service Tax (CST) and will be levied on service fees payable by users of electronic communication services.
The proposed at nine per cent (9%) additional taxes is seen by fiscal experts as part of government strategy to boost its revenue base which has been badly affected by tumbling oil revenue.

Senate chambers
Senate chambers

The services liable to the new tax burden include voice calls, short messaging service (SMS), multimedia messaging service (MMS), data usage from telecommunication service providers, pay per view television stations, and Internet service providers.
A recent report by PricewaterHouseCoopers, PwC Nigeria, a tax and financial services consulting outfit, notes that if the bill becomes law, service providers will be mandated to file monthly tax returns with the FIRS with strict penalties for non-compliance.
While the Federal Inland Revenue Service (FIRS) will be responsible for the collection of the tax and its payment together with any interest and penalty into the Federation Account, the Federal Government will be responsible for the administration and management of the funds.
The Bill provides that all service providers are to file tax returns and pay the tax due not later than the last working day of the month immediately after the month to which the payment relates. Failure to comply with this provision will attract stiff financial penalties on erring entities
Many consumers have condemned the bill as seeking to increase the burden of subscribers and the service providers. PWC report says, “Multiple-taxation already exists in the information and telecommunications industry such as IT tax on profits, Annual Operator Levy on turnover and VAT on consumption of their services,” adding that the introduction of the CST would increase the tax burden on both service providers and their customers.

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