OrderPaperToday – A Communication Tax bill, 2019 (SB. 12) slated for first reading on Wednesday seeks to tax consumers for telephone calls and text messages.
The bill however, opposes the proposed increment of Value Added Tax (VAT) by the Federal Government.
Recall that the Federal Executive Council had earlier proposed increment of the VAT from five percent to 7.5 per cent.
Although the Senate committee on Finance promised to meet with the Minister of Finance, the matter was not brought up in chamber upon resumption from recess.
But the bill sponsored by Sen. Ndume Mohammed Ali (APC, Borno) rejects the proposed 2.2% increase. It however provides an alternative proposition to impose a tax on mobile communication services.
Speaking with journalists at the end of plenary on Wednesday, Senator Ndume noted that the VAT increment is “skewed against ordinary Nigerians” as it will “ultimately create grave discomfort” as the prices of goods and services will equally increase.
However, the Communication Service Tax will help distribute wealth “in such a way that it would not affect the ordinary people.”
The newly introduced bill will impose 9% charge for the use of the electronic communication services such as voice calls; SMS; MMS; data usage both from telecommunication services providers and internet service providers as well as pay per view TV stations.
Some provisions of the bill include: “There shall be imposed, charged payable and collected a monthly Communication Service Tax to be levied on charges payable by a user of an Electronic Communication Service other than private Electronic Communication Services.
“The tax shall be levied on Electronic Communication Services supplied by Service Providers. For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of Electronic Communication Service.
“The tax shall be paid together with the Electronic Communication Service charge payable to the service provider by the consumer of the service.”
“The tax is due and payable on any supply of Electronic Communication Service within the time period specified under sub-clause (5) of whether or not the person making the supply is permitted or authorised provide Electronic Communication Services.”
The Federal Inland Revenue Service (FIRS) will be in charge of collecting the tax as well as issuing penalties for defaulters
More duties as required from FIRS states: “The Federal Inland Revenue Service (FIRS) established under section 1 of the Federal Inland Revenue Service (Establishment) Act, 2007 shall be responsible for collection and remittance of tax, any interest and penalty paid under this Bill.
“The FIRS shall pay the tax collected together with any interest and penalty into the Federation Account.”
Also, service providers are expected to file a tax return to account for the tax.
The bill explains further: “The tax return shall be in a form prescribed by the FIRS and shall state the amount of tax payable for the period and any related matters that may be required.
“The return and the tax due to the accounting period to which the tax return relates shall be submitted and paid to the FIRS not later than the last working day of the month immediately after the month to which the tax return and payment relates. The FIRS may extend the period within which the tax return may be submitted and payment made on application in writing by a service provider, where good cause is shown by the applicant.
“The extension shall be communicated to the applicant in writing and shall state the circumstances under which the tax return shall be submitted for the particular period. A service provider who without justification fails to submit to the FIRS the tax return by the date is liable to a pecuniary penalty of N50, 000.00 and a further penalty of Nl0, 000.00 for each day the return is not submitted.
“A service provider who refuses to provide access to its relevant network for Government or its appointed agent as specified in sub-clause (4) (b) and (c) commits an offence and is liable to pay a penalty of five per cent of the annual gross revenue of the last admitted financial statement of the service, provider after the first thirty days and if the situation persists after ninety days, the National Communication Commission may revoke the operating licence of that service provider.”