Base on recent increase in Value Added Tax (VAT) proposed by the federal government and announced by Minister of Finance, Mrs Zainab Ahmed few weeks ago, the Senate has proposed an imposition of tax on communication and cable television services.
AllTechNG gathered that the bill for an Act to establish the Communication Service Tax was moved on the floor of the Senate on Wednesday and sponsored by former Senate Leader, Mr Mohammed Ali Ndume.
Meanwhile the Communication Service Tax Bill proposes to charge nine percent tax for the use of the communication services like calls and data usage and an extra one percent charge on Social Intervention Programme.
According to sponsor of this new bill, the introduction of this new tax would replace the proposed 2.2 percent increase in the VAT suggested by federal government.
Mr Ndume said the imposition of tax on communication service was a better way of distributing wealth in such a way that would not affect an average citizen of the country.
The Senator explained that increasing VAT would have very serious effect on the economy as it could affect prices of goods and services and take them beyond the reach of the people.
“While the 2.2 percent increase in the VAT affects all Nigerians, the 10 percent Communication Services tax affects only those who could afford the use of GSM in the country.
“It is the lack of distribution of resources in the country that is fueling insecurity and all manners of criminality in the country,” he 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,” a part of the Communication Service Tax Bill read.
The bill further stated that, “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 such 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.
“The tax shall be paid together with the electronic communication service charge payable to the service provider by the consumer of the service,” it further read.
On the agencies charged with the responsibility of collecting the tax, 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,” it added.
The bill further stated that all service providers shall file a tax return to account for the tax and proposed a penalty that reads, “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 N10,000.00 for each day the return is not submitted.”