Nigeria: Subscriber Association Wants Govt to Charge Tech Tax

The National Association of Telecommunications Subscribers (NATCOMS) has called on the Federal Government to charge a Technology Tax of 1% on the Net Profit of companies with income above N100million rather than on Gross-Profit. The National President of NATCOMS, Chief Deolu Ogunbanjo made this appeal in a press statement made available to THISDAY.

He called on the Upper and Lower Chambers of the National Assembly and the Presidency to charge Technology Tax of 1% on net profit only, just like it’s being done with the Education Tax Fund (ETF) which is for the development of Education in Nigeria . Ogunbanjo stated that charging Technology Tax on gross profit will not augur well for subscribers, consumers and those who patronize the products and services rendered by affected companies.

Gross-profit is the value of difference between cost of production of a product/service and its selling price, (i.e. without allowance for overheads, promotion or other expenses).

Net-profit is the final profit after all discount, taxes, overheads, promotion and other expenses have been deducted.

Telecoms Companies. Digital mobile operators, Pension Mangers, Internet Service Providers, Cyber Companies and all Financial Institutions including Banks, Insurance companies etc, whose income is above N100m (One hundred million naira) are to pay 1% (one percent) of their gross profit as technology tax, for Information Technology Development, as provided for in the National Information Technology Development Agency Act 2007, which was signed into law by the erst-while Federal Government Administration.

Ogunbanjo who stated that NATCOMS welcomes the National Information technology Development Agency Act 2007, as it is good for the future of Information Communication Technology (ICT) in Nigeria , also added that the Act will also strengthen the nation’s hob-nobbing with other developing, developed and industrialized nations of the world.

The Association of Telecommunications Subscribers also condemned in its entirety, the increase in GSM Tariff/Charges recently effected by the operating companies in Nigeria . NATCOMS in the statement wondered if the VAT charge of 10% is based on GSM companies inter -connect rate (i.e. rates from one network to another) of N11.22k per minute as approved by the Nigeria Communications Commission (NCC) or if the VAT charge of 10% is based on GSM operating company’s across-network rate which is between N44.00 per- minute depending on the network. It also sought to know how much the 5% VAT charge paid on the N11.22k per-minute inter-connect rate, in view of the fact that the n11.22k inter-connect rate is inclusive of 5% VAT as well as how much will be paid to the Federal Government now that VAT is 10%. NATCOMS also called on the Nigerian communications commission (NCC) to break-down what makes up the inter-connect rate of N11.22k as approved by it. The association also sought to know if the NCC has approved the new tariff/charges of the GSM operating companies as being implemented since the NCC is the industry’s regulator.

NATCOMS also expressed concern on why GSM operating companies make as much as N25 – N30 per-minute on every subscriber as gross income and yet cannot absorb a N0.55k (fifty- five kobo only) VAT increase. Ogunbanjo stated that VAT charges are taxes levied on a product at manufacturing or distribution stage of the chain and wondered why GSM companies base their VAT charges on sales tariff to subscribers by increasing tariff by between N6.00 – N8.00 (six- eight naira only) per-minute, representing about 15% -20% increase. (Whereas it should on be 5% more of the current GSM companies inter-connect rate of N11.22k, which is 55k only).

According to Ogunbanjo, “if marketing is the management process responsible for identifying, anticipating and satisfying customer requirements at a reasonable profit”, must the GSM companies make very excessive parofit? Making excessive profit is an inhuman act, it is also an act of cheating on subscribers/customers. If the ” Marketing mix is all about the 4P’s Product mix, Place mix, Price mix, and Promotion mix, the GSM companies must be told that their Profit mix is very unreasonable, excessive, exploitative, illegitimate and inhuman”, he stated.

Source: This Day (lagos)