The Problem Statement
The Nigerian Senate has proposed a Communication Service Tax Bill (2019) as extra revenue for the national budget. This has met widespread criticisms arising from the decline in economic growth, tax multiplicity and collection amongst others.
The Policy Solution
The Bill entitled ‘Communication Tax Bill, 2019 (SB.12)’ proposes the introduction of the tax which is meant to replace the 2.2% increase in the Value Added Tax being planned by the Federal government.
The Communication Service Tax Bill provides that the rate of the tax is 9% of the charge for the use of the communication service.
It also states that the tax shall be levied on Electronic Communication Services supplied by Service Providers. These imposed charges are payable by a user of an Electronic Communication Service other than private Electronic Communication Services (Voice Calls; SMS; MMS; Data usage and Internet services. The bill further places the Federal Inland Revenue Service (FIRS) as the relevant tax authority responsible for collection and remittance of tax, any interest and penalty paid.
A company that renders chargeable services will file a Communication Service Tax (CST) return on or before the last day of the month following the month of payment. Hence, a taxpayer can request for extension of time to file a CST return which is subject to the fulfilment of specific conditions. Entirely, the FIRS has the discretion to accept or reject an application.
NIGAC Constructive Position/Take
Following the global decline of crude oil price, it has become obvious that Nigeria can no longer rely on oil revenue to sustain the economy; hence the need to identify and explore alternative sources of generating revenue.
One area that the FGN is focusing to plug the gap in revenue is taxation; thus the proposed introduction of the Communication Services Tax Bill (the Bill). The Bill seeks to impose and collect communication services tax (CST or levy) on charges payable by consumers of electronic communication services in Nigeria (excluding private electronic communication services) at the rate of 9%.
This new type of tax would generate more revenue for the government but to the detriment of telecommunication operators and the masses.
It is very important that Government in its bid to increase its revenue, consider the implications to its citizens.