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Senate Mulls Communication Service Tax

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May Reject VAT increase


By Henry Umoru


ABUJA- THE Senate has begun moves to put in place a law that would make it mandatory for taxes to be paid on Communication Services.

To kick start this, a Bill for an Act to establish the Communication Service Tax was formally presented on the floor of the Senate yesterday as first reading.

The bill is sponsored by former Senate Leader, Senator Ali Ndume, All Progressives Congress, APC, Borno South.

Senate,  Tax

The Communication Service Tax Bill provides that the rate of the tax is 9% of the charge for the use of the communication service.

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Specifically, the Bill provided that the Tax shall be levied on the such Electronic Communication Services like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as Pay per View TV Stations.

If the Bill is finally passed by the Senate, the  introduction of tax on Communication Services would replace the 2.2% increase in the Value Added Tax, VAT  being planned by the Federal government as recently announced by the Minister of Finance, Zainab Ahmad.

Briefing Journalists yesterday after the first reading of the Bill was taken by the Senate, Senator Ndume however explained that the imposition of tax on communication service was a better way of distributing wealth in such a way that would not affect the ordinary people.

Ndume who noted that  increasing VAT would have very deadly effect on the economy as it could affect prices of goods and services and take them beyond the reach of the ordinary people.

The Communication Service Tax Bill provides

reads in part: “There shall be” imposed, charged payable and collected a monthly Communication Service Tax to be levied on charges payable by a user of an Electronic Communication Service other than private Electronic             Communication Services.

“The tax shall be levied on Electronic Communication Services supplied by Service Providers.”

“For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of Electronic Communication Service.”

If the bill is passed, “The tax shall be paid together with the Electronic Communication Service charge payable to the service provider by the consumer of the service.u

“The tax is due and payable on any supply of Electronic Communication Service within the time period specified under sub-clause (5) of whether or not the person making the supply is permitted or authorized provide Electronic Communication Services.”

On the agencies charged with the responsibility of collecting the tax, the Bill said, “The Federal Inland Revenue Service (FIRS) established under section 1 of the Federal Inland Revenue Service (Establishment) Act, 2007 shall be responsible for collection and remittance of tax, any interest and penalty paid under this Bill.”

“The FIRS shall pay the tax collected together with any interest and penalty into the Federation Account.”

According  to the bill, all service providers shall file a tax return to account for the tax, adding, “The tax return shall be in a form prescribed by the FIRS and shall state the amount of tax payable for the period and any related matters that may be required.

“The return and the tax due to the accounting period to which the tax return relates shall be submitted and paid to the FIRS not later than the last working day of the month immediately after the month to which the tax return and payment relates.”

The bill also states that “The FIRS may extend the period within which the tax return may be submitted and payment made on application in writing by a service provider, where good cause is shown by the applicant.

“The extension shall be communicated to the applicant in writing and shall state the circumstances under which the tax return shall be submitted for the particular period.”

“A service provider who without justification fails to submit to the FIRS the tax return by the date is liable to a pecuniary penalty of N50, 000.00 and a further penalty of Nl0, 000.00 for each day the return is not submitted.”


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