9% communication tax
Communications Minister, Adebayo Shittu

Association of Telecommunication Companies of Nigeria (ATCON), has said it rejects the 9% communication tax proposed by the Federal Government. It however admitted that government’s desire to widen her tax net was commendable.

The Association disclosed this in a letter through its president Olusola Teniola to the senate president Bukola Saraki. He urged the National Assembly to peg its proposed communication tax at 1% instead of its 9% plan.

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“The reality of Internet access in Nigeria is that it is all about mobile. Only about 13% Nigerians get broadband access via mobile while less than 1% of the people do from fixed services.”

“The projections are that a new tax on the ICT services as high as 9% that is being proposed will result in excluding 10% of the population, that is talking of about 20m Nigerians from access. Whereas, the survival of our economy is on attracting more citizens to have access to Internet and therefore ICT services. It does not add up if whatever we do ends up not bringing more people into access.”

“We, therefore, suggest that an increase in VAT tax, which is already included in all services of telecommunications by an increase that is not beyond one percent should be a good reform strategy.”

Tax Will Upset Internet Adoption Rate

Operators further argued that the tax would upset Nigeria’s internet adoption rate which according to them is low due to the high cost of data in the country.

“In Nigeria, the average income in 2014 was $2970 (GNI per capita, source: World Bank). 40% of the population actually earned less than half that amount. In practice, this means that a 500MB mobile Internet plan priced at 5.4% of average monthly income actually costs the majority of Nigerians anywhere between 7-18% of monthly income.”

“No doubt, there is severe pressure at this time and government revenue cannot be different. We, however, pray that the template with which the telecoms industry is viewed and assessed be slightly modified.”