Why Reps will probe Glo, 9mobile, others

House of Representatives has mandated its committee on Information and Communication Technology to investigate payment and remittance of tax accruable to the National Information Technology Development Agency by GSM service providers.

This came after the lawmakers at a plenary on Friday adopted a motion moved by the member representing Ukwa East/Ukwa West Federal Constituency, Uzoma Nkem-Abonta, and titled ‘Motion of Urgent Public Importance on Need to Investigate Payment and Remittances of Taxes Accruable to the National Information Technology Development Fund Established by the NITDA Act 2007.’

Details of probe: The Committee is expected to “investigate payment and remittance of tax accruable to the NITDF by GSM service providers and all telecommunication companies as well as cyber companies and internet providers since 2008 till date.”

The House is concerned about reports of non-payment and underpayment of taxes accruable to the NITDF by licensed mobile network operators, international data access license owners, interconnect clearinghouse license owners. Others are cyber companies and internet providers, international gateway license owners, unified access license owners, and the international submarine cable and international landing station license owners.

“The House is alarmed that the reports suggest that from the end of the 2008 financial year, when the NITD tax became operational, till date, the taxable companies such as Glo and Airtel have only paid tax for four years while 9mobile has not paid at all, Nkem-Abonta said.”

Why it matters: The lawmakers are bent on taking them up as they believe these companies make huge amount of annual profits that run into billions of naira and may, with the aid of the FIRS officials, be resorting to sharp practices that will enable them to declare loss or less profit, thereby avoiding payment of NITD tax or making underpayment.

“The House is worried that if companies are allowed to evade or underpay tax, Nigeria will continue to lose a veritable source for generation of revenue and development will be slow or hampered,” he added.

The lawmaker also noted that Section 12 of the Act established NITDF, into which is paid a levy of one per cent of the profit before tax of companies and enterprises enumerated in the Third Schedule of the Act, with an annual turnover of N1billion and above.

He stressed that in accordance with the provisions of the NITDA Act, the FIRS was mandated to assess, collect and pay all accruable levies into the fund, while the board of NITDA had powers to manage the fund.

Meanwhile, Nairametrics had reported that the Association of Licensed Telecoms Companies of Nigeria (ALTON) has called on the Federal Government to address the issue of multiple taxes, which it described as irrelevant, as it stifles economic growth.

Chairman, ALTON, Gbenga Adebayo, in an interview, said the development had been a recurrent decimal that requires Executive Order.

Why it matters: Over-taxation has several consequences. Foremost, it necessarily limits Nigeria’s economic growth because it directly limits telecoms operators’ expansion drive and thwarts sector investment and advancement.

He said, “This then limits digital inclusion and mobile penetration. As some of these taxes are passed on to consumers, the vicious cycle continues, as mobile/data usage falls, the government tax net remains narrow and revenue targets are not met. 

“Our major challenge stems from the activities of supposed landowners of infrastructure sites, states, and local governments. We have 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 called for an urgent re-evaluation of Nigeria’s fiscal priorities fit for population explosion set to occur over the next two decades.

“The current fiscal landscape reflects an approach that emphasises short term unsustainable gain at the expense of long term sustainable growth. No nation has ever taxed itself into prosperity. Governments do need money. How often, and from whom they take it, are difficult political issues; but we must ask the questions that lead us on a path to envisioning a better Nigeria for us all. 

“We must designate telecoms assets as critical national infrastructure, to safeguard the lifeblood of our nation from disruptive actions with rising insecurity and terrorist activity, our intelligence and emergency forces,” he added.

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