25% Telcos may close shop over proposed tax 

There are fears that 25 per cent of licensed telecommunication firms in Nigeria may soon shut down, due to the proposed introduction of communications service tax.

A private-member Bill, titled ‘Communication Service Tax Bill’ seeks to impose and collect  levies on every service consumers of electronic communication services in Nigeria enjoy.

But the bill has been eliciting several different reactions from both operators and consumers.

If passed into law, it will make a subscriber of all-related services to share tax consumption charge, in addition to any fee that he might have been billed by the service provider.

Already, the Inland Revenue Board has prepared a template for collation and distribution of revenue anticipated from the tax in line with its enabling law, said an official.

Of the 11 licensed companies offering various telecommunications services in Nigeria, five have wound down, while two were acquired between 2012 and 2015.

Read also: Nigeria rakes in $38bn from telecoms, plans big for sector

An estimated 67.10 million Nigerians are described as active subscribers, according to the international Telecommunication Union.

But the National Chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, said recently that despite the growth already recorded in the industry, the operators had continued to face challenges emanating from recurring taxations and the regulatory environment.

He said, “When I became the chairman of ALTON three years ago, there were 35 licensed telecoms companies comprising some small players, those in the fixed line, Code Division Multiple Access and Global System for Mobile communications players that were doing well, though not without challenges.

“However, today, that figure has come down drastically, as we now have just about 15 licensees still operating and this tells you that something is not going well.”

But a senior staff  of one of the four major telecoms firms confirmed that findings from a study conducted by the regulatory department of his company showed that no fewer than 25 per cent of the existing licensed operators would cease operating in the country one year after the CST bill is passed.

He said the Federal Government should be prepared for the worse, as so many Nigerians would be rendered jobless, a situation that will be too bad for the sector, currently seen as one of the highest employers of labour.

 

 

 

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