Telecom sector paid N119bn tax in three months – Report
TECHDIGEST – Telecommunication consumers, firms, and other players in the information and communications sector paid N119.87bn as taxes in the first quarter of 2023.
This was a 35.91 per cent year-on-year increase from the N88.19bn they paid in the corresponding period of 2022. The tax was made up of Company Income Tax and Value Added Tax, and data was gotten from the National Bureau of Statistics.
In Q1, 2023 telecommunication firms and other players in the information and communications paid N35.75bn as CIT, while telecom consumers and consumers of other information and communications services paid N84.12bn as VAT.
According to the NBS, the information and communications sector was one of the top contributors to CIT in the quarter under review.
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It said, “In terms of sectoral contributions, the top three largest shares in Q1 2023 were financial and insurance activities with 22.94 per cent; manufacturing with 20.91 per cent; and information and communication with 11.89 per cent.”
Telecom services also generated the most VAT in the period. The statistics body noted, “In terms of sectoral contributions, the top three largest shares in Q1 2023 were manufacturing with 29.65 per cent; information and communication with 19.29 per cent; and mining and quarrying with 12.24 per cent.”
Total VAT and CIT collected amounted to N1.18tn in Q1, 2023, and the Information and Communications sector was responsible for 10.17 per cent of it.
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According to the NBS, the information and communication sector is composed of the activities of telecommunications and information services; publishing; motion picture, sound recording and music production; and broadcasting.
The telecom sector is a major contributor to the ICT sector. It was responsible for 82.17 per cent of the sector’s output in 2022.
The ICT sector is one of the major pillars of the country’s GDP and a major source of revenue in the form of taxes for the government.
In 2021, the Federal Inland Revenue Service listed MTN Nigeria, one of the four mobile network operators in the country, as one of its top taxpayers.
A statement signed by the company’s secretary, Uto Ukpanah, read, “In 2021, MTN Nigeria’s total tax contribution to all government agencies, including the FIRS, amounted to N757.6bn while FIRS collected a total of N6.4trn tax revenue in the year.
“Specifically, MTN Nigeria paid a total of N618.7bn in direct and indirect taxes to the FIRS in the 2021 tax year, representing approximately 13.5 per cent of the total FIRS collection for the year.”
Despite its positive contribution to revenue generation, the former Minister of Communications and Digital Economy, Isa Pantami, once stated that the sector might crumble under the burden of taxes.
He noted that telecom firms pay about 41 different taxes across both federal and state levels.
He said, “The ICT sector is being overburdened with so many categories of tax. If care is not taken, this is going to jeopardise the achievements and gains we have recorded so far in the sector.”
There have been projections that the government may place a five per cent excise duty on telecom services, in a bid to boost its revenue.
If this happens, consumption tax on telecoms is expected to hit 12.5 per cent.
A The PUNCH analysis showed that the Federal Government would generate about N160.46bn from five per cent excise duty in a year.
While the telecoms sector was verbally exempted from the tax by the Buhari administration, it was included in the recently signed Finance Bill 2023.
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