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Furore as Telcos Hike Communications Service Tax to 9%

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Mobile phone users in Ghana yesterday (October 1, 2019) started paying 3% more on Communication Service Tax, according to Pulse.

 

Nigerians are fighting against the same Bill seeking 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%.

 

But in Ghane, the tax which was hitherto pegged at 6%, was increased to 9% after, Ken Ofori-Atta, finance minister announced that the CST will be higher.

 

He announced this decision in Parliament in July during the presentation of the 2019 mid-year budget review.

 

Mobile users have received text messages from their service providers about the increase. The telcos in their messages said the increase will be “applied to every recharge.”

 

“Dear customer, with the increase in Communications Service Tax – CST to 9%, effective 1st October 2019, CST of 9% will be applied to every recharge. Thank you,” a text to a Vodafone Ghana user read.

 

A statement issued by the Ghana Chamber of Telecommunications said that the increase means that “for every GH¢1 of recharge purchased, a 9% CST fee will be charged leaving GhS0.91 for purchase of products and services”.

 

If you purchase GHC2 airtime you will have GHC1.82

 

Airtime of GHC5 will leave the customer with GHC4.55

 

When a client buys GHC10 the customer will have GHC9.1 for purchase of products and services.

 

GHC20 airtime will leave you with GHC18.2 worth of airtime

 

When you buy a GHC50 worth of airtime you will get GHC45.5 for products and services.

 

In Nigeria, the federal government has mulled Communication Services Tax Bill (the Bill).

Key highlights of the Bill are as follows:

Electronic communication services subject to the levy include: voice calls, SMS, MMS, data usage (both from Telecommunication Services Providers and Internet Service Providers), Pay per View TV Stations etc.

 

The tax is to be paid together with the electronic communication service charge payable to the service provider by the user of the service.

The tax is payable whether or not the person making the supply is permitted or authorized to provide electronic communications services.

The Federal Inland Revenue Service (FIRS) is responsible for collecting the tax from service providers and remitting it into the Federation Account.

All service providers are expected to file monthly returns not later than the last working day of the month immediately after the month to which the tax returns and payment relate.

Penalty for failure to file returns on or before the due date is N50,000 and an additional N10,000 for each day the returns are not submitted.

Failure to pay the tax by the due date attracts monthly interest on the tax due at a rate of 150% of the average of prevailing commercial banks’ lending rates as published by the Central Bank of Nigeria and for this purpose, part of one month shall be deemed to be one month. Where interest payable is not paid within one month after the due date, interest shall be paid on the unpaid interest at the same rate and manner on the unpaid tax.Where tax, penalty and/ or interest is due, FIRS may apply to the Court for an order that compels an individual or business who holds money for or on account of the service provider to pay to the FIRS that money or so much of it as is sufficient to discharge amount due. Where this situation continues, FIRS may apply to the Court for an order to distrain the assets, goods, etc. of the service provider.

In the case of liquidation or bankruptcy, the tax, due shall take precedence over other obligations.

For the purpose of verification of taxes due to government, an agent would be appointed to establish both electronic and physical monitoring mechanisms to monitor, analyse, verify and save all necessary data and information.

A service provider who refuses to provide access to its relevant network for government or its appointed agent commits an offence and is liable to a penalty of 5% of annual gross revenue of the last audited financial statements and if situation persists after 90 days, National Communications Commission (NCC) may revoke the operating license of that service provider.

 

 

 


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Telecom

Airtel Boosts NIPR Public Relations Week with Onsite Unlimited Data Connection

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Telecommunications service provider, Airtel Nigeria has collaborated with the Nigeria Institute of Public Relations (NIPR) to provide with unlimited internet access at the institute’s inaugural edition of the Nigeria Public Relations Week.

The trailblazing event themed ‘Leveraging Public Relations as a Critical Asset for Nigeria’s Economic and Reputation Renaissance’ is set to run from Monday, April 22nd to Friday, April 26th, 2024, and will welcome thousands of delegates across Nigeria to the prestigious June 12 Cultural Centre, nestled in the heart of Abeokuta, the Ogun State capital.

Speaking on the strategic collaboration, Femi Adeniran, Director, Corporate Communications and CSR, Airtel Nigeria, expressed enthusiasm about the partnership, stating, “Airtel is proud to support the Nigeria Institute of Public Relations in its endeavor to advance the field of public relations.

“The relevance of public relations practice in Nigeria cannot be overstated, as it plays a vital role in shaping perceptions, managing reputations, and influencing public opinion. Hence, our support is a demonstration of our commitment to empowering individuals and organizations with innovative solutions that drive progress and create an enabling society.”

According to NIPR, through the PRWeek Organizing \Committee Chairman, Mr Yomi Badejo Okusanya, the NPRW will gather over 2,000 experts in the fields of economics, PR, and nation-building to discuss strategies for effectively communicating government policies and initiatives to the public.

Other activities at the NPRW will include conferences, the annual general meeting, workshops, induction of new members, breakout sessions with students as well as traditional rulers and a tour of some legacy projects in Ogun state.

With Airtel’s provision of onsite unlimited data connection, attendees and participants can enjoy unparalleled access to online resources, real-time updates, and interactive engagements throughout the duration of the event. This will significantly support the exchange of ideas, foster networking opportunities, and elevate the overall experience for all stakeholders involved.

Airtel Nigeria remains committed to offering unwavering support for initiatives aimed at driving innovation, collaboration, and nation-building.


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World Earth Day: Kuda Partners with Wecyclers to Clean up Communities in Lagos

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In a landmark partnership aimed at promoting sustainable waste management practices, Kuda Microfinance Bank and Wecyclers collaborated to commemorate World Earth Day on April 22, 2024. The collaboration featured a series of impactful activities designed to raise awareness and foster environmental stewardship.

The activities on the day included a webinar session facilitated by renowned expert in environmental management and head of ESG at Wecyclers, Omobolanle Olowu, during which she shared startling data on plastic pollution in Nigeria. She also discussed the importance of proper waste management and its significance in preserving the planet for future generations, providing valuable insights and practical tips on reducing, reusing, and recycling waste.

In a published study on plastic pollution in Nigeria, the country ranked ninth globally for plastic pollution with an estimated 2.5 million tons of plastic waste generated annually and less than 12% of those waste materials recycled.

Also on the day, Kuda staff volunteered for an environmental cleanup exercise, during which they took to parts of Apapa Road, Ebute Metta to empty gutters and collect plastics and other recyclable materials for recycling.

In addition, volunteers from Kuda gained firsthand knowledge of innovative waste management solutions during a guided tour of Wecyclers’ facility in Ebute Metta. The tour showcased Wecyclers’ pioneering efforts in recycling and waste upcycling, demonstrating how technology can be leveraged to address environmental challenges effectively.

Speaking about the collaboration, Emmanuel Femi-Adejobi, Senior Brand Manager at Kuda, expressed enthusiasm for the partnership’s potential to drive positive change. “We [Kuda] are committed to promoting sustainability and environmental consciousness. We also believe that our responsibility is not only to our customers and other stakeholders but also the environment that we all share. Partnering with Wecyclers allows us to inspire communities to adopt eco-friendly practices,” he said.

“Our initiatives towards achieving a sustainable environment and achieving a green earth goes beyond just recycling. We aim to inspire a broader commitment to waste minimization, reusing materials and proper sustainable waste management. As we commemorate World Earth Day, we encourage our staff, customers and general public as a whole to embrace actions that promote a green, safe earth for all,” he added.

Likewise, Esther Chibueyin Fagbo, Head, Human Resources and Partnerships at Wecyclers, emphasised the importance of collective action in addressing environmental issues. “It is very important for organisations to collaborate on initiatives that help save the environment. We are excited about this partnership because such partnerships are crucial to creating awareness and educating people about the impact of plastic waste on the planet and how they can contribute to a change that we all deserve.”

Kuda’s collaboration with Wecyclers emphasises its commitment to sustainability and championing proactive efforts through education, engagement and action to create an environmentally conscious population and a sustainable tomorrow.


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Defending the Foundations for Connectivity

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By Engr. Gbenga Adebayo

In 2001, when the first GSM call was made in Nigeria, how many of us would have envisaged the digital world that we live in today?

Defending the Foundations for Connectivity

Gbenga Adebay, chairman, ALTON

The pace of growth and the rate of adoption of telecoms solutions in Nigeria has been revolutionary. It is a globally acknowledged case study that we should be proud of and a clear demonstration of what can be achieved.

Almost all of us today are reliant on the network connectivity that it has enabled in different shapes and forms. From the simple need to communicate with loved ones, to the digital platforms that enable our access to and consumption of entertainment, financial products and other critical services.

Our reliance on these systems is becoming more and more acute, whether it is citizens, governments, or corporations.

System downtime is increasingly disruptive and offline manual redundancies are often in the advanced stages of being phased out. The pace of this transition is not slowing down. With the core infrastructure in place, innovation is driving the exponential growth of services that ride on it. From the fully adopted social media that has changed the way we interact, to the emerging Artificial Intelligence (AI) revolution.

While this innovation is enabling exciting new possibilities, there is a tendency to focus on those opportunities, to the detriment of the core infrastructure on which it rides.

It is imperative that we retain a focus on the optimisation of that infrastructure and enable continued investment in its development.

We have seen how the transition from 2G, through to 3G, 4G and 5G have each enabled the development of more and more sophisticated solutions.

The continued development of core infrastructure has to be sustainable, and over the last few months we have begun to see the challenges that the operators that provide it are facing.

Both MTN and Airtel have declared significant foreign exchange (FX) losses in Nigeria, and the stress is not linked to them alone.

The entire ecosystem is battling with a range of challenges that must be addressed. If we fail to do so, the downstream impact on innovation will be severe. Telecoms infrastructure requires a base level of investment to maintain its current capabilities, and significant additional investment to expand and grow. It is capital intensive and that capital has to be generated through sustainable business models.

At the heart of the challenge the industry faces is the issue of rising costs.

Recent financial losses are directly linked to the cost of operating towers that rely on inputs like diesel, which have increased significantly as the Naira has depreciated.

The provisions large telecom companies have had to make, and the consequent losses and impact on their reserves is a red flag.

It tells us that business as usual is not sustainable. If we continue as we are, then those companies will struggle to continue to invest in and maintain existing services.

But those costs are not the only challenge. General cost inflation, multiple taxation, regular and damaging vandalisation of infrastructure and the costs associated with regulatory compliance all help contribute to the high cost of operations.

We cannot continue to follow a path that asks those companies to simply accept those rising costs. It is no longer sustainable, and we have reached an inflection point.

This is a critical moment for the industry.

How we approach and resolve it will define the future of Nigeria’s digital economy.

If you want to be able to enjoy the benefits that digitisation brings. If we want the infrastructure that enables AI and helps us drive growth, then we must take action now.

Cost-reflective tariffs, like it or not, are simply non-negotiable. We have seen the impact of price controls in other segments of the economy, like power.

If providers cannot operate sustainable business models, then they stop investing. When that happens, the existing infrastructure starts to crumble.

For power, a consumer can choose to take ownership of the solution by buying a generator, or a solar panel.

For fuel, the government can step in as the provider of last resort and manage a subsidy regime that mitigates the impact on the population. Those options are not available in the telecoms sector. There is no self-help solution.

We fully understand and appreciate the financial stress that Nigerians are experiencing today. The cost of living is the single most significant factor in most people’s daily lives.

But those people are still able to enjoy the benefits that connectivity brings, at the price they paid before these challenges became so acute.

Imagine a future in which the gains of the last twenty years are reversed. Nigeria, and Nigerians simply cannot afford it. The pain that we would feel under those circumstances would be exponentially worse.

We need to find a long-term, sustainable and manageable solution to this problem. Prices will need to rise, but action needs to be taken in a measured way, through sustainable conversations and partnership with the government. It is time to address this head on.

 

Engr. Gbenga Adebayo is chairman, Association of Licensed Telecom Operators of Nigeria (ALTON).


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