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Telecom operators bemoan multiple taxation

By on December 20, 2014

Nigeria’s telecommunications operators face multiple taxes and fees at local, state and federal level, with service disruptions related to tax claims costing the sector millions of dollars annually,two of the country’s mobile operators told Reuters.
Mobile phone penetration nearly tripled between 2007 and 2012 and hit 96 per cent at 2013-end.
The sector accounted for 7.8 per cent of Nigeria’s economy in the nine months to September 2013, more than double its 2009 contribution of 3.7 per cent, and such income has made it a soft target for tax collectors, said MTN Nigeria – a unit of South Africa’s MTN.

“The ‘Golden Goose’ effect has fuelled demands for larger social spending, taxes,” MTN Nigeria said in a statement to Reuters.
Federal, state and local governments all have tax-raising powers, leading to multiple taxation of telecommunications companies, MTN added.
“Operators have been seeking a one-stop shop to ease administration of taxes,” MTN said, warning operators suffer arbitrary enforcement actions and service disruptions by parties working on behalf of tax-raising bodies.

“The cost of disruption to our industry runs into millions of dollars annually,” MTN added.

MTN Nigeria is the largest mobile operator with 58.4 million subscribers, giving it a 44 percent market share, according to the Nigeria Communications Commission (NCC).
Globacom has 27.6 million subscribers, Airtel Nigeria, part of India’s Bharti Airtel, 26.1 million and Etisalat Nigeria 19.9 million.

Etisalat Nigeria, an affiliate of Abu Dhabi-listed Etisalat , told Reuters it wants the federal government, through the NCC, to be the sole sector regulator.

“It is common to have government agencies trying to impose duties and enforce regulatory functions similar to that of the NCC,” said Etisalat Nigeria. “There are levies and other charges that are demanded by government institutions which have all the characteristics of a tax.” The company declined to provide details on its tax payments, but warned current practices could hurt its margins.

In a 2012 speech, NCC official Okechukwu Itanyi had warned “spurious taxes and levies … portend grave dangers for this sector.”

He had listed some of these taxes. On Airtel alone, these included Bauchi State’s N755 million  for branding and advertising, Imo State’s N262.4 million  pest control charge and Delta State’s N276 million ecological tariff.

Itanyi and Airtel declined to comment. Globalcom did not respond to requests for comment.