TECHDIGEST – Taxation is one of best ways of generating revenue for countries all over world. Over the decades, Nigeria has been struggling to beef up her revenue from taxation but that has proven difficult due to policy limitations, corruption, lack of patriotism and the tendency for most Nigerians to try to cut corners.

Since 2015 however, the present administration has put together a couple of ground-breaking laws, policies and initiatives to expand the tax net, get millions of more Nigerians to pay taxes and beef up the country’s revenue base. From the time of Babatunde Fowler who headed the Federal Inland Revenue Service (FIRS) to the present leadership led by Muhammad Umar, trillions of naira have been generated in tax revenues for the federal government.

The FIRS in the year 2021 collected a total of N6.405 trillion in both oil (N2.008 trillion) and non-oil (N4.396 trillion) revenues beating the target of N6.401 trillion.
Companies Income Tax amounted to N1.896 trillion; Petroleum Profits Tax amounted to N2 trillion; Value Added Tax amounted to N2.07 trillion; Electronic Money Transfer Levy amounted to N114 billion; and Earmarked Taxes amounted to N208.8 billion.

Meanwhile, since the coming of Professor Isa Ali Pantami as Minister of Communications and Digital Economy and his team of experts, tax revenues from ICT and telecommunication have increased in multiple folds. This is due to the unprecedented reforms they brought on board.

Nigerians are being taxed and they are paying heavily. This must be the reason why the recent idea of extra five percent telecom tax has not been well received by the masses.

READ ALSO: Pantami to lead discourse at Nigeria Internet Governance Forum 2022

While the government through the Minister of Finance, Budget and National Planning, Zainab Ahmed, is willing to expand it’s revenue through the imposition of additional taxes such as the 5 percent excise duty on telecom services, they need to be wary of over-taxing people and taxing the poor masses to death.

In fact, any arbitrary imposition of such taxes on already impoverished masses could spell doom for the government as it can lead to some form of revolt or rebellion. Fortunately, to the delight of many, Prof Pantami recently announced the suspension of the 5 percent telecom tax.

He made the announcement during the inaugural meeting of the Presidential Committee on Excise Duty for the Digital Economy Sector in Abuja.

One of the reasons he gave was that the digital economy is already facing the problem of excess taxation and sometimes, multiple taxation. The minister therefore considered any other form of taxation as insensitive to Nigerians.

Unfortunately however, contrary to the pronouncement by the minister, the Director-General of the Budget Office, Ben Akabueze, said the issue was still on, that the federal government had not suspended it.

This has thrown spanner in the works as Nigerians thought they would heave a sigh of relief and escape what looks like a punishment from the government in the face harsh economy – high unemployment, underemployment inflation rate, poverty rate, low purchasing power, poor value of the naira etc.

I will use this opportunity to advise the federal government to listen to the wise counsel of Pantami and not do something that will deemed insensitive.

This crusade doesn’t mean tax is not important. Taxation is the bedrock of infrastructure development and Nigeria’s evolution in taxation is an interesting one.

During the 1970s and late 80s, attention was focused on oil revenue, so much that all the states in the country depended solely on revenue from the Federation Account. However, the dawn of global recession showed an intense fall in oil prices and by extension reduced revenue from the Federation Accounts, the overdependence on income from oil generated a disparity in the implementation of some of the fiscal policies.

Governments (Federal, State, and Local) began to look inwards, focusing on Internally Generated Revenue (IGR) as a sustainable means of funding as insolvency hovered among the states. The revenue accruing to the Federal Government of Nigeria from oil over the years has remained grossly insufficient to meet the growing social and public spending required in facilitating economic growth and infrastructural development in the country.

Hence, Nigeria employed taxation as an alternative to the source of revenue when crude oil revenue began to fluctuate. The contribution of taxation to all economies around the world cannot be overemphasised. Apart from the revenue function it performs for the government, it is also used to help the country achieve its macroeconomic goals in the areas of fiscal and monetary policies.

While I will conclude by urging Nigerians of taxable ages to pay their taxes as at when due and stop shortchanging themselves by hoarding monies that could be used to provide infrastructure, it is equally important for the federal government to stay action on the issue of extra five percent telecom tax as it is a very bad Idea that is coming at very bad time.

Vivian is a Mass Communication student at Ahmadu Bello University (ABU), Zaria.

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TECHDIGEST – The Minister of Communications and Digital Economy, Professor Isa Pantami, on Monday rejected the renewed attempts by the Federal Government to add a five percent excise duty to telecommunication services.

Pantami disclosed this in Lagos at the ongoing exhibition organised by the Nigeria Office for Developing the indigenous Telecom Sector.

READ ALSO: Nigerians to pay more for call, SMS, data services as FG set to increase tax

He said the telecom sector already contributes a lot to the Nigerian economy, and adding more taxes could negatively impact its growth.

The minister urged the government to consider taxing other sectors of the economy that are not contributing to national development.

On Thursday, the Minister of Finance Budget and National Planning, Mrs Zainab Ahmed said Nigerians are soon to start paying 12.5 percent tax on telecommunications services.

She disclosed this at a stakeholders’ forum on implementation of excise duty on telecommunications services in Nigeria in Abuja.

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By Zeenat O. Sambo

TECHDIGEST – On 18th May 2022, the federal government announced the approval of tax reliefs for tech startups. The news gave a euphoric feeling to Eddy Emmanuel and many other young innovators and entrepreneurs craving the opportunity to develop their innovations.

The approval will enable the implementation of strategies to encourage and support the development and growth of more Innovation-Driven Enterprises (IDEs) in the country.

Emanuel who studied Animal Husbandry developed a platform for community engagement in pasturing, trading, and live breeding to eliminate open grazing which had led to conflicts between pastoralists and farmers. This has escalated into incessant attacks by so-called “unknown gunmen” causing mayhem in the communities.

Without a doubt, the introduction of these tax reliefs will allow him to conveniently introduce more Nigerians to adopt this improved and cost-effective digital system of pasturing without fear.

Bright Ubani and Uzor Chigozie Joshua, two pioneers who created a digital platform called Level Up, are pleased with the tax relief initiative. The goal of the platform is to promote a culture of free skills training among youths across the country. They started a community to community training but were stymied by taxes which frustrated their effort to contribute positively to their communities.

Similarly, Lade Omoremi, an aspiring waste recycling innovator, lamented that the taxes had discouraged her from nurturing her innovation into a profitable startup that will be of great benefit to her community.

Startups are organizations or projects at their early stage of operation which is created by an entrepreneur to find, develop, and validate a scalable business model. But startups in Nigeria are often overwhelmed by multiple taxes and levies when they venture to seek investors or begin operations.

As a key factor in the progress of developing countries, startups contribute to the standard of living of the local population by introducing new technologies and attracting foreign investment, as well as enabling local innovators to address local problems with their innovations.

To cut down the margin of unemployment, it is pertinent to recall that the federal government’s effort to engage many Nigerians in small and medium-scale enterprises has been a major concern over the years.

With the approval of tax reliefs for startups, more innovators will be able to take advantage of the incentive to build and grow profitable tech companies that will create jobs.

For instance startups like Carbon, Jumia, Konga, and others have helped to create over direct 3000 jobs in the country. According to Jobberman 2020 Digital Sector Report, Nigeria’s digital economy has the potential to create an average of 1.3 million tech-enabled jobs across all sectors by 2025, and the tax relief package will make it easier for this prediction to come into reality.

Yet many people are unaware of the extent of the tax reliefs and incentives that are available because of the absence of an awareness campaign.

As such, SMEs need to note that there are tax exemptions for small businesses with an annual turnover of less than N25 million. Startups in their early stages should be aware that a lower company income tax rate of 20 percent is granted to companies whose yearly turnover is between N25 million to N100 million.

There are various incentives for investors and startups involved in venture projects. Eligible startups enjoy up to 30 percent capital allowances on equity investments made by Venture Capital firms along with a capital gains tax exemption of up to 100 percent upon disposal of an equity interest.

Furthermore, in a bid to encourage the growth of the startup ecosystem, the federal government mandated companies to do business with startups on projects involving the central government or any of its agencies to enable them to thrive locally and internationally.

Most struggling startups believe that this tax relief package will enable them to revive and re-strategize into a viable enterprise that can thrive and grow at will.

National Information Technology Development Agency (NITDA) needs to fashion out a comprehensive awareness creation programme to enlighten startups on the available tax reliefs and how to access such incentives with ease.

Therefore, agencies like the National Office for Technology Acquisition and Promotion (NOTAP), Nigerian Investment Promotion Commission (NIPC), and others should partner with NITDA for the efficient implementation of the tax reliefs.

Such a collective approach would spur more indigenous innovators and boost the growth of the startup ecosystems to sustain Nigeria’s thriving digital economy.

Zeenat O. Sambo
Wuye District, Abuja

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TECHDIGEST – Telephone subscribers will not be paying more for calls in Nigeria with the recent signing of the National Health Insurance Authority Bill 2021 by President Muhammadu Buhari into law.

Contrary to reports, the federal government expunged the section imposing a new telecommunications tax to finance the new National Health Insurance Authority Act (NHIA).

President Buhari signed the health bill into law May 19, 2022 amidst public apprehension that telephone subscribers will be asked to pay more for calls to fund the NHIA.

READ ALSO: FG Imposes Tax On Phone Calls To Finance Healthcare Fund

Section 26(1c) of the Act which mandated the collection of “telecommunications tax, not less than one kobo per second of GSM calls” was expunged before the president appended his signature.

Telecom sector already over-taxed
But government, worried over the possibility of over-burdening subscribers with additional financial weight in a sector already deemed to be over-taxed, pack-pedalled and remove the section on telecom tax.

Pressure from telecom operators and other stakeholders also informed government’s decision. The sector is already debating hiking tariffs over inflationary cost of producing a minute of voice calls or a byte of data.

NHIA is broader cover for Universal Health Coverage

The NHIA repeals the National Health Insurance Scheme Act 2004 and offers a broader cover for Nigeria to achieve Universal Health Coverage – a Sustainable Development Goal (SDG) by 2030.

The NHIA is designed to bring affordable healthcare, social health insurance to majority of Nigerians poor and deemed to be within the Vulnerable Group. More than 83 million poor Nigerians are to be captured under this scheme.

According to the federal government, “For the large number of vulnerable individuals who are not able to pay health insurance premiums, a Vulnerable Group Fund will be set up to include a component of the Basic Health Care Provision Fund due to the Authority, Health Insurance Levy, Special Intervention Fund, and any investment proceeds, donations and gifts to the Authority.”

The expunged telecommunications tax was supposed to be part of the funding channels for the Vulnerable Group Fund created under the NHIA.

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TECHDIGEST – The Federal ​Government has imposed a tax on telephone calls in the nation to fund free healthcare for vulnerable​ Nigerians.​​

This new tax is coming despite moves by telecom companies to increase the price of calls, SMS, and data by 40 percent as a result of an unfavorable operating environment.

The telecom tax, in the equivalent of a minimum of one kobo per second for phone calls, is a part of the sources of funds required to finance free healthcare for the Vulnerable Group in Nigeria, according to the National Health Insurance Authority Bill 2021 signed by President Muhammadu Buhari last week.

Under the new tax, the federal government will get a minimum of one kobo per second for phone calls It added that the Vulnerable Group Fund will subsidize the provision of healthcare to children under five, pregnant women, the aged, physically and mentally challenged, and the indigent as may be defined from time to time.

The Act includes a provision under Section 26 subsection 1c which states that one of the sources of money for the Vulnerable Group Fund shall include a telecommunications tax, not less than one kobo per second of GSM calls.

Speaking on the development via his Twitter handle, Taiwo Oyedele, fiscal policy partner and Africa tax leader at PwC, said the new telecommunications tax is equivalent to a 9 percent tax on GSM calls since call rates are charged at 11 kobo per second.

“S.26 of this new law imposes a telecommunications tax of not less than 1kobo per second on GSM calls. With call rates at about 11kobo per second, this translates to a 9% tax on GSM calls,” his tweet reads in part.

According to the act, the Vulnerable Group Fund is money budgeted to pay for healthcare services for vulnerable Nigerians who cannot pay for health insurance in a bid to subsidize the cost of provision of health care services to vulnerable people in the country.

READ ALSO: Why Telcos Are Asking For 40% Tariff Hike On Data, Calls – ALTON

For funding, the act provides several options such as a basic health care provision fund to the authority; health insurance levy; telecommunications tax, not less than one kobo per second of GSM calls; money that may be allocated to the Vulnerable Group Fund by the Government; motley that accrues to the Vulnerable Group Fund from investments made by the Council: and grants, donations, gifts, and any other voluntary contributions made to the Vulnerable Group Fund.

But telecom subscribers under the aegis of the National Association of Telecoms Subscribers, have said they will reject this new move by the government.

The President of the association, Adeolu Ogunbanjo, said, “It is quite unfortunate that the government is viewing telecoms as a cash cow. We are saying. There is a lot of corruption in the system, and rather than curb that they want to focus on the telecoms sector. “What do they mean by vulnerable?

Vulnerable people in the nation are probably about 80 percent of the population; we are all vulnerable. What has happened to the health budget? Why should it touch telecoms again? The government should look elsewhere for money. This new action is only likely to impoverish more Nigerians and they are masquerading as helping the vulnerable. This is not right.”

Source: Techeconomy.ng

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TECHDIGEST – Beginning this quarter of 2022, the Nigerian government plans to charge 6% tax on turnover on e-commerce businesses provided by non-resident companies in Nigeria. This brings the government’s tax lens over non-resident companies like Amazon and a host of other e-commerce platforms, large and small, offering web or mobile based transactions to Nigerians.

According to the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, in a breakdown of the 2022 budget this week in Abuja, services to be taxed include various apps, electronic-data storage, online advertising and such other similar digital services by foreign companies.

Abuja is widening its tax net over non-oil revenue. “Digital-services tax is one of the measures government is introducing to help boost public revenue amid “emerging fiscal constraints and challenges” notes a report by Bloomberg Tax.

The new tax regime is covered by the 2021 Finance Act, which empowered the Federal Inland Revenue Service (FIRS) to access Company Income Tax (CIT) on the turnover of a foreign digital company involved in transmitting, emitting, or receiving signals, sounds, messages, images, or data of any kind including e-commerce, app stores, and online adverts.

“Section 30 of the Finance Act designed to amend section 10, 31 and 14 of value-added tax (VAT) is in relations to VAT obligations for non-resident digital companies and the mechanism that will be used is to restrict VAT obligations mainly to digital non-resident companies who supply individuals in Nigeria who can’t themselves self-account for VAT.

“So, if you visit Amazon, we are expecting Amazon to add VAT charge to whatever transaction you are paying for. I am using Amazon as an example. We are going to be working with Amazon to be registered as a tax agent for the FIRS,” said Ahmed during the public presentation.

She said government remains committed to modernising taxes, ensuring compliance in line with the global digital economy and best practice.

Highlights of the new tax

Digital non-resident companies not required to be registered locally but must maintain a working arrangement with the FIRS to collect and remit taxes in order to reduce compliance burden.

Tax regime empowers the FIRS to assess Non-Resident Firms to tax on Fair & Reasonable Turnover Tax Basis on Turnover earned from providing Digital Services to Nigerian customers.

Tax regime introduced Turnover Tax on Fair & Reasonable Percentage of Profits earned from providing Digital Services to Nigerian customers.

VAT obligations restricted mainly to Digital Non-Resident Companies (who supply individuals who cannot self-account for VAT).

Tax regime is expected to reduce the compliance burden on other Non-Resident Taxpayers who are not required to register for VAT in Nigeria.

Source: itedgenews.ng

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