Major stakeholders in the telecommunications sector in Nigeria, led by the Association of Telecommunications Companies of Nigeria (ATCON) and Association of Licensed Telecoms Operators of Nigeria (ALTON) in agreement, have called for a downward review of the 2.5% Annual operating Levy (AoL) charged by the Federal Government through the Nigerian Communications Commission (NCC). 

They said that it should be slashed to 1.5%. 

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. 

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 support the drive of the multiple tax imposers, make it difficult to resist them.

Industry stakeholders recently 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.

Speaking at a stakeholders’ forum the National President of Association of Telecommunications Companies of Nigeria, Engr. Olusola Teniola, averred that a downward review of the levy has become imperative, especially in the face of dwindling revenue and tough business climate in the country.

The AoL is a 2.5 per cent charged by the NCC on the yearly revenue of both network and non-network providers in the country. He said service providers are seriously groaning under several questionable taxes imposed by states and their agency on players in the industry.

Teniola who also called for the hamonisation of the various forms of taxes in the sector, appealed to NCC to consider their calls for AoL downward review.

He noted that a one-stop-shop for collection of taxes would do the sector and indeed Nigeria good, especially in the quest for more Foreign Direct Investments (FDIs).

He also decried that states and their agencies see service providers as ‘cash cows’ that they can easily latch on to and get some quick funds.

In agreement with the National President, Ms Funke Opeke, Chief Executive Officer, MainOne, Funke Opeke, said it had become really difficult for operators to expand, especially to unserved areas because of the volatility of the environment, and the mentality paraded by handlers of those states, who have formed the habits of imposing taxes on service providers.

Opeke noted that the last time a major investment came into the telecoms sector was in 2010, adding that investors are seriously dying under multiple taxes, which are mostly imposed on operators by states and their agents.

She urged NCC to come up with a new approach in meeting with states government on the dangers multiple taxes and over regulation have brought on the sector.

On his part, Engr. Gbenga Adebayo, Chairman of ALTON, also called for a downward review of the levy, saying this has become necessary going by the increasing usage of Over-The-Top (OTT) services by telecommunications customers, which according to him, is adversely impacting on operators’ revenue.

Adebayo, while noting that telecoms operators are confronted with 39 different taxes that have become great hindrance to further expansion of services in Nigeria, harped on the need for the Nigerian Communications Commission NCC to be more strategic to do something different. This, he said, is because the multiple taxes and arbitrary closure of telecom sites always affected the quality of service, which in turn impact on other sectors.

Underscoring the need for this levy reduction, Adebayo explained: “For example, let me say you sell N1 million, then you remove your expenses, you remove your tax, and then you take your profit from it.

“What NCC does is to take the entire turnover, that is, all income before tax and before expenses, then take 2.5 per cent on it, which in itself is not a fair approach. This is because for you to achieve this N1 million, you would have spent certain money.

So, I feel you should actually take out your expenses before they apply the 2.5 per cent. So, what it then means is that the 2.5 per cent is actually additional expenses on the operators.

“It is high, because it is 2.5 per cent of yearly turnover, not 2.5 per cent of profits. They need to consider a downward review.”

They called for an Executive Order (EO) to stem incessant multiple taxes imposed on their operations.

They unanimously agreed that the ongoing negotiations between telecoms operators, telecoms regulator and state governors were not yielding results as the state governors were bent at milking telecoms operators, through multiple taxation.