The Nigeria Sentae has heard the first reading for A bill for an Act to introduce 9 percent tax increase on communication and cable television services on Wednesday.
The Bill for an Act to establish the Communication Service Tax was sponsored by a former Senate Leader, Ali Ndume and is meant to replace the 2.2 per cent increase in the Value Added Tax being planned by the Federal Government.
Section 1 of the Bill said: “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 levied on the following Electronic Communication Services:(a)Voice Calls; (b) SMS; (c) MMS; (d) Data usage both from Telecommunication Services Providers and Internet Service Providers; (e) Pay per View TV stations, etc.”
On persons liable to pay the tax, Section 2 of the Bill said: “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.”
Section 3 added that the rate of the tax is nine per cent of the charge for the use of the communication service.
On the mode of collection and payment into the Federation Account, Section 4 of the Bill said: “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.”
On the submission of tax return and time for payment, Section 5 of the Bill said: “All service providers shall file a tax return to account for the tax.
“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.”
The payment of interest and outstanding tax, according to Section 6 of the Bill, “a service provider who fails to pay the tax by the due date shall pay monthly interest on the tax due at a rate of One hundred and Fifty per cent of the average of the prevailing commercial Banks lending rate as published by the Central Bank of Nigeria.
“For the purpose of sub-clause of this clause (1) any part of one month shall be deemed to be one month. Subject to clause 6 (6) where the interest payable under sub-clause (1) is not paid within one month after the due date, interest shall be paid on the unpaid interest at the same rate and in the same manner on the unpaid tax.”
On recovery of tax, interest or penalty due, Section 7 of the Bill said: “A tax or penalty of any interest due under this Bill which remain unpaid after the due date may be recovered by the FIRS as a debt.
“An amount shown as the tax on a bill or invoice for Electronic Communication Service usage is recoverable as tax from the person who issues the bill or invoice whether or not – (a) Tax is chargeable on the Electronic Communication Service Usage; or (b) The person who issues the bill or invoice is a person authorized to provide Electronic Communication Service under this Bill.
“Where a body either corporate or unincorporated which is liable for the payment of the tax, of any penalty on interest that arises under the Bill, defaults in payment, in whole or in part after written demand, the directors, partners and the person in control of the body are jointly and severally liable to pay the sum due.”
“Where tax penalty of interest is payable and due under this Bill the FIRS may apply to the Court for an order that compels an individual or business – (a) from whom money is due or is accruing to the person required to apply the, interest or penalty, or…
“(b) who holds money for or on account of the person required to pay the tax interest or penalty to pay to the FIRS that money or so much of it as sufficient to discharge the tax interest or penalty payable and due.”
What does this 9 percent increase in Tax in GSM Providers mean for You and I?
Impact of this tax would be transferred to the final consumers, and will lead to an increase in call tariffs.
Data will no longer be affordable, it will be expensive as it was 9 years ago.