Tariff Hike On Calls Imminent As FG Approves 5% Excise Duty On Top-Up Credit, Vouchers

There seems to be no escaping payment of higher charges on calls by mobile phone subscribers because the federal government has approved the collection of five per cent excise duty on telephone top-up cards and vouchers.

The charge is part of new items on the list of goods liable for excise duty on the Finance Act in the country.

Excise duty is a levy charged at the time of manufacturing. It is also a form of indirect tax on the sale or consumption of certain goods, products, services or activities such as tobacco, alcohol, narcotics, gambling etc., mainly to discourage their use and consumption. Nigeria’s Finance Act has extended the list to include beverages, non-alcoholic drinks etc.

According to a circular Zainab Ahmed, Minister of Finance, Budget and National Planning, directed the Nigeria Customs Service (NCS) to create a tariff line for the collection of the excise on mobile telephones, electricity meters (components) and set up boxes at five per cent.

The federal government is expected to raise at least N150 billion from the duty while Customs will pocket about 10 billion, a 7 per cent collection fee.

The circular conforms with another list of excisable items by customs to include telephone recharge cards and vouchers at five per cent.

Section 21 (1) of the Act describes goods liable to excise duty as “Goods imported and those manufactured in Nigeria and specified in the first schedule of this Act shall be charged with duties of excise at the rate specified under the duty column in the Schedule.

Subsection 2 further added that “telecommunication services provided in Nigeria shall be charged with duties of excise at the rate specified under the duty column in the Schedule as the President may by Order prescribe pursuant to section 13 of this Act”.

In the current (2021) finance act, a new section was inserted to include “excise duty on non-alcoholic, carbonated and sweetened beverages shall be charged at a specific rate of N10 per litre”.

The new 5 per cent levy on recharge cards will increase call costs and add to other taxes levied on telcos operating in the country. Some of these levies include the right of way charges, National Information Technology Development Fund Levy, National Cybersecurity Fund, and Annual Operating Levy in addition to existing statutory taxes like tertiary education tax, companies income tax, and value-added tax.

Earlier in the week, telecommunication companies on the platform of Association of Licensed Telecom Operators of Nigeria (ALTON) asked for upward reviews in voice calls, short message services (SMS) and data costs. In a recent letter addressed to the Nigerian Communications Commission (NCC), ALTON cited the rising energy costs and high operating expenses as major reasons.