Bridge crossing, community access fee… 49 taxes paid by telcos in Nigeria

March 30, 2024 4:45 pm

Bridge crossing, community access fee… 49 taxes paid by telcos in Nigeria

The Nigerian telecommunications sector has been burdened with multiple taxation imposed by federal, state, and local governments.

Multiple taxation in the telecommunications industry slows down investment and affects the costs of call, data, and short message service (SMS), as telcos pass on the taxes to consumers through their services.

Despite ongoing efforts by operators to bring the issue of tax burden to the government’s attention, there has been limited progress in addressing it.

On November 20, 2023, Tony Izuagbe, president of the Association of Telecommunication Operators of Nigeria (ALTON), issued a communiqué to the senate committee on telecommunications to quickly address the issues of multiple taxation to avoid revenue losses in the industry.

“The Nigerian telecom industry is often faced with multiple regulations that usually lead to multiple taxation,” he said.

“As of today, our members pay taxes to federal government agencies, state government agencies, and local government agencies.

“All these taxes impact our members negatively because money earmarked for network expansion must be redirected to pay illegal taxes.”

Furthermore, on December 13, 2023, during a workshop, Adeleke Adewolu, executive commissioner for stakeholder management of the Nigerian Communications Commission (NCC), also identified multiple taxations as major obstacles militating against the sustainable development of the telecom industry in the country.

Adewolu said multiple taxes and regulations are hindering the development of telecom infrastructure, the very foundation upon which the entire digital economy relies.

“This is not referring to legitimate taxes imposed by appropriate authorities following necessary due processes, but the many irregular, often duplicated, and sometimes hastily posed taxes and charges that some agencies pursue for short-term revenue gains,” he said.

According to Adewolu, some agencies neglect the greater long-term impacts of their actions on investor confidence, the socio-economic well-being of the people, and overall national economic growth.

“Multiple taxation and regulations imposed on infrastructure maintenance, environmental impact charges, and waste collection charges, in addition to value added tax and sales tax being paid simultaneously, add to the cost of services enjoyed by consumers,” he said.

TAXES DISPUTED BY TELCOS

In a tax and levy document seen by TheCable, seven charges imposed on the telecommunications industry were disputed.

At the heart of the disputed taxes are; water levy and bridge crossing charges.

Demands for water levy — meant to be paid for use of underground water sources — and the bridge crossing charges — payable for fibre optic along the river crossing — were disputed.

Another point of contention is the effluent discharge fee, a levy typically charged to industries that release sewage water that has been (partially) treated.

The telcos dispute the charge, saying they do not produce effluent in their operations.

The dispute extends beyond these specific cases, as network providers also question the rationale behind operational permits, economy development fees, and capitation fees.

ARBITRARY AND NO CLEAR BASIS CHARGES

In the document, it was noted there is “no clear basis” for fire service fees imposed to cover the deployment of firefighters and equipment.

Similarly, network providers said there is no clear basis for sewage fees meant for wastewater removal.

Also, the community access fee paid to Rebisi Kingdom in Rivers state was described as arbitrary charges.

Below is a full list of taxes and levies paid by network providers in Nigeria: