Report: Telecommunications Industry Pays N119bn in Taxes in the First Quarter

In the first quarter of 2023, the telecommunications sector, including consumers and companies, contributed N119.87bn in taxes.

This represents a 35.91% increase compared to the N88.19bn paid during the same period in 2022. The taxes consisted of Company Income Tax (CIT) and Value Added Tax (VAT), as reported by the National Bureau of Statistics (NBS).

During Q1 2023, telecommunication firms and other stakeholders in the industry paid N35.75bn as CIT, while telecom and other communication services consumers paid N84.12bn as VAT.

According to the NBS, the information and communications sector ranked among the top contributors to CIT during the quarter. The three sectors with the most significant shares in Q1 2023 were financial and insurance activities (22.94%), manufacturing (20.91%), and information and communication (11.89%).

The telecommunications industry also accounted for the highest VAT contributions in the same period.

The NBS noted that manufacturing (29.65%), information and communication (19.29%), and mining and quarrying (12.24%) were the top three sectors in terms of VAT contributions.

The VAT and CIT collections for Q1 2023 amounted to N1.18tn, with the Information and Communications sector responsible for 10.17% of that figure.

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The information and communication sector encompasses telecommunications and information services, publishing, motion picture, sound recording, music production, and broadcasting.

Telecoms play a significant role in the ICT sector, accounting for 82.17% of the sector’s output in 2022. ICT is a crucial component of the country’s GDP and a significant government tax revenue source.

In 2021, MTN Nigeria, one of the country’s major mobile network operators, was listed by the Federal Inland Revenue Service as one of its top taxpayers. MTN Nigeria’s total tax contribution to various government agencies, including the FIRS, amounted to N757.6bn in 2021.

Despite its contribution to revenue generation, the former Minister of Communications and Digital Economy, Isa Pantami, expressed concerns that the sector could collapse under excessive taxation.

He highlighted that telecom companies currently face approximately 41 different taxes at the federal and state levels, emphasizing the need to protect the sector’s achievements and progress.

There have been speculations that the government may impose a 5% excise duty on telecom services to boost revenue. If implemented, the consumption tax on telecoms could reach 12.5%.

An analysis by Eyewitness9ja suggests that the federal government could generate around N160.46bn annually from a 5% excise duty.

Although the telecom sector was initially exempted from the tax, it has now been included in the recently signed Finance Bill 2023.