ATCON wants levy slashed to 1.5%, hamonisation of taxes

Telecommunications operators have called for a downward review of the Annual operating Levy (AoL) charged by the Federal Government through the Nigerian Communications Commission (NCC).

The operators, under the aegis of Association of Telecommunications Companies of Nigeria (ATCON), said the figure, which is 2.5 per cent of their yearly revenue, should be slashed to 1.5 per cent. They argued 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.

The President, ATCON, Olusola Teniola, who raised this issue in Lagos, said service providers are seriously groaning under several questionable taxes imposed by states and their agency on players in the industry.

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

The ATCON president 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.

The Chief Executive Officer, MainOne, Funke Opeke, insisted that it has 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 state, 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 lord 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.

To the Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, who also called for a downward levy review, 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 said telecoms operators are confronted with 39 different taxes, which are a hindrance to further expansion of services in Nigeria.

He also harped on the need for the NCC to be more strategic to do something different, because the multiple taxes and arbitrary closure of telecom sites always affected the quality of service, which in turn impact on other sectors.

To underscore the need for levy reduction, Adebayo said: “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.”