Communication Service Tax

Senate Unveils Communication Service Tax

The Nigerian senate has unveiled a communication service tax on all telecom consumers nationwide.

A bill to enact a legislative action to impose a communication service tax was on Wednesday presented in Senate for first reading.

The bill, according to Businessday, is to replace the 2.5 percentage point increase in the Value Added Tax (VAT) being planned by the Federal government. Finance minister, Zainab Ahmed had announced the proposed VAT increase.

Tagged “Communication Service Tax Bill, 2019” it is being sponsored by former Senate Leader, Ali Ndume.

The Bill stipulates that Tax shall be levied on Electronic Communication Services like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as Pay per View TV Stations.

Ndume, while fielding questions from journalists after the bill was presented for the first time, explained that it would enhance distribution of wealth where ordinary Nigerians would benefit.

According to Ndume, it is unhealthy to increase VAT because it will greatly affect the economy by astronomically jacking up prices of goods and services.

A copy of the Bill sighted by journalists reads thus:

“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 authorized provide Electronic Communication Services.”

“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.” it added

The bill further stated that 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.”

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