Federal Government Unveiled Fresh Plan To Introduce Excise Duty On Telecoms’ Airtime Charges

The federal government has unveiled a new plan to introduce excise duty on telecoms’ airtime charges.

A statement issued by Reuters said Nigeria was considering introducing an excise tax on telecoms airtime charges as a way of boosting revenue for the cash-strapped nation.

The report quoted the Director-General of the Budget Office of the Federation, Mr Ben Akabueze, as revealing this plan at a World Bank event where the need for the federal government to raise additional funds was discussed.

“Last year, we found that 51 countries in Africa have excise on airtime charges, so we are looking at that as well as an area to tax,” he said.

But in response, telcos under the auspices of the Association of Licensed Telecoms Operators of Nigeria (ALTON), have stepped up their opposition to the new scheme, saying it will lead to double taxes that have slowed the growth of telecoms in the past.

The fastest way to convert Airtime to cash in Nigeria

Responding to the statement Chairman Akabueze, ALTON Chairman, Mr Gbenga Adebayo, said that since the intention for the introduction of excise tax on telecoms airtime charges were not clear to industry players, telecoms operators would rather wait to see how the federal government intends to introduce an excise tax on airtime recharges.

He said the proposed tax would be double taxation because there is an existing value-added tax (VAT) on all telecoms airtime recharges.

He said: “It is not clear to telecoms why the federal government want to introduce an excise tax on telecoms airtime recharge. Excise duty is introduced in manufacturing goods and it is introduced when the government wants to reduce the intake of such manufactured products. Except the federal government wants to discourage the importation of recharge cards into Nigeria in order to encourage telecoms operators to use alternative means of vending airtime, like the virtual top-up that does not need a physical recharge card.

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“For example, it would be sensible if the federal government decided to raise the tax on tobacco because it wanted to reduce tobacco in Nigeria due to health problems, but it will be out of place for government to introduce an excise tax on telecoms airtime.”

He added that the telecoms sector is still the only sector that has not increased charges on services and airtime charges since the launch of the Global System for Mobile Communication (GSM) and warned against any attempt to introduce an excise tax on telecoms airtime recharge would negatively affect telecoms services offerings across networks.

“The government should be careful not to introduce additional burden on telecoms operators,” Adebayo said.