Multiple Taxations Choking Telecom Companies

Finding a lasting solution to the problem of multiple and illegal taxation will enhance growth in the telecoms sector.
We know that globally, telecommunications industry is one of the most taxed economic sectors and the same is true of Africa and Nigeria.
 African governments, according to findings, will earn an estimated $71billion in tax revenues paid by mobile operators by 2012.
 It was also estimated that an additional 43 million people could get connected by 2012, leading to an increase of $930million in tax.
But the current heavy taxes imposed on telecoms companies at the federal, state and local government levels, have been a major obstacle, which retards economic growth, limits profits, compromises quality of service and slows network expansion.
Experts also believe that high taxation is responsible for the slow pace of digital penetration and connectivity in the rest of sub-Saharan Africa. According to GSM Association, an organisation of more than 700 mobile phone operators in more than 220 countries, supported by over 178 equipment manufacturers, mobile telephony taxations in sub-Saharan Africa account for 35 per cent of revenues of mobile operators in Nigeria
In addition to the statutory taxes levied on operators, telecommunications operators pay Annual Operating Levy (AOL) of certain percentage of earnings to the Nigerian Communications Commission (NCC) and are required in addition to pay various rates and charges to other Federal Government agencies (e.g. Consumer Protection Council, Nigeria Lottery Commission, federal and state ministries of environment etc), authorities in every state and local Government in which they operate.
Also the police and thugs, who supported the drive of the multiple tax imposers made it difficult to resist them
Only recently, Association of Licensed Telecommunication Operators of Nigeria, (Alton) picked holes in the nation’s tax structure, saying the ugly menace of multiple taxation has to be removed to attract more investors into the nation’s telecoms industry.
Gbenga Adebayo, chairman of the group said that “our members are constantly harassed, their base stations and offices locked indiscriminately by governments, especially at the lower tiers over alleged refusal to pay taxes and levies.
“Our major challenge stem from the activities of states and local governments. Members have brought documents evidencing requests for taxes and levies that are, in our view, outside of what is prescribed by law. We hear also with evidences from our members, instances where state and local government authorities have physically invaded offices, locked up base stations and employed other unwholesome tactics to enforce these taxes and levies,” he said.
As he cried out, ,Titi Omo-Ettu,  president, Association of Telecommunications Companies of Nigeria, (Atcon), said that the telecoms industry was distressed as against the popular, but false belief that telecoms firms were making excessive profit.
According to him, it is the false belief that makes everybody, including state and local governments to impose frivolous, unfair and sometimes illegal taxes on telecoms firms.
Adebayo and Omo-Ettu believe that the immediate and long term effects of discouraging business include a negative impact on ability to create new jobs due to high operating costs, loss of revenue for government in terms of taxes which can be legally obtained, slow or no economic growth, economic distress, closure of businesses and others.
In what seems as part of efforts to tame the multiple taxation problems in the country, the federal executive council on January 20, 2009 adopted a draft National Tax Policy for Nigeria, which was expected to grow tax revenue at all tiers of government, enhance government revenue from non-oil tax and also increase transparency and accountability in tax management.
The policy was also to provide a new set of guidelines, rules and modus operandi that would regulate Nigeria‘s tax system and provide a basis for tax legislation and administration in the country. Most importantly, the policy was aimed at curbing multiple taxation.
We agree with Alton and Alton that there should be certainty in rates and certainty in the mechanism of collection.
Rates should be as enshrined in statutes and government rather than tax consultants should collect taxes the higher the consultants the more the fees.”
There is also need to highlight the consequences of multiple taxation which includes the relocation of businesses outside Nigeria evident in the manufacturing sector of the Nigerian economy, downsizing and retrenchment of staff, unemployment and loss of revenue to government.