Consumers and firms operating in the information and communication sector paid N631.09 billion in taxes in 2022, according to data from the National Bureau of Statistics (NBS). This makes the IT sector one of the largest contributors to Value Added Tax (VAT) and Company Income Tax (CIT) for that year. Telecom consumers and users of other IT services accounted for N268.84 billion in consumption taxes on calls, SMS, data and related services, while telecom and other IT companies paid N362.26 billion in CIT. Overall, the government collected N5.34 trillion from CIT and VAT, with the IT sector contributing 11.82 percent of that total.
The NBS defines the information and communication sector as encompassing telecommunications and information services, publishing, motion picture, sound recording and music production, and broadcasting. In 2022, the telecom subsector alone accounted for 82.17 percent of the sector’s contribution. Regarding sectoral shares in the fourth quarter of 2022, the NBS reported that manufacturing led with 32.17 percent, followed by information and communication at 18.05 percent, and public administration, defence and compulsory social security at 9.87 percent for VAT. For CIT, the top three contributors were manufacturing (31.20 percent), financial and insurance activities (12.96 percent), and information and communication activities (12.77 percent).
The digital economy’s growth, driven primarily by telecoms, has boosted government revenue. In 2022, the sector added N12.32 trillion to real GDP and recorded 222.23 million telecom subscriptions. With declining oil revenues, the government plans to increase taxes on the sector, adding a five‑percent excise duty on telecom services that would raise consumption tax from 7.5 percent to 12.5 percent.
Minister of Communications and Digital Economy Isa Pantami rejected the proposal to raise the telecom consumption tax to 12.5 percent, arguing that the telecom sector is only one of a few contributors to the economy. He emphasized the need for broader sectoral participation, stating, “The sectors that are contributing to our economy today are few. What we should be doing is ensuring that all other sectors can also contribute. A lot of sectors are consumers; these are the sectors that we should be tasked to contribute. A sector cannot be a consumer today; each sector must contribute a certain percentage to the economy. If we fail to do that, we increase pressure and risk destroying the digital economy sector.”
Pantami noted that telecom firms face about 41 different taxes. SBM Intelligence, in a report titled “Taxing Nigeria’s Subnational Economies to Oblivion,” listed federal taxes applicable to telecom companies, including Company Income Tax, Capital Gains Tax, Withholding Taxes, Stamp Duty, National Industrial Training Fund, Employees Compensation Scheme, Tertiary Education Trust Fund, National Housing Fund contributions, Contributory Pension Schemes, and customs duties.
Reflecting industry concerns, Adeolu Ogunbanjo, National President of the National Association of Telecoms Subscribers, told The … that “there are too many taxes on telecom service. Putting too many taxes on it is not fair. When you buy airtime, you pay VAT. Why are we still paying VAT for the services?”
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