As of the fourth quarter of 2021, 12.61 per cent of the nation #39 GPD was contributed by the telecommunications sector, statistics also show that the telecommunication sector’s contribution to the national GDP is higher than all other sectors.

Although this sector has had positive economic effects on Nigeria, it still faces threats like multiple taxation and Regulation from Ministries, Departments and Agencies of the Federal and State Governments.

The rapid rate of growth and development in the telecommunication sector has resulted in a surge in the Nigeria Government revenue generation through taxation. However, there is no check and balance regarding the number of taxes telecommunication companies pay. As stated in a report by the Nigeria

Communications Commission (NCC), Mobile Network Operators (MNOs) that provide telecommunications services in Nigeria are subjected to over 40 different taxes and levies. Some of the taxes include Companies Income Tax, The Tertiary Education Trust Fund (TETFUND the Capital Gains Tax,

Withholding Tax, Stamp Duty, Industrial Training Fund (ITF), Employees Compensation Scheme, Customs Duties, Tenement Rates/Land Use Charge, Business Premises Registration Fees, Effluent discharge levy, Ecological Levy, Emission levy amongst others.

As a result of the nature of their services, MNOs are present in different locations across the country to provide services and support to their subscribers. This occasionally results in disputes with various governmental organisations, local governments, and taxing authorities on the taxes and levies due on their operations. According to the National Tax Policy, there are multiple taxations when "the tax, fee, or rate is levied on the same person in respect of the same liability by more than one State or Local

Government Council," which is defined as " any compulsory payment to government imposed by law without direct benefit or return of value or service, whether it is called a tax or not".

The adverse effect of these heavy taxes does not only affect individual MNOs. They also inhibit the growth of the sector and affect the customers. It affects the industry’s ability to innovate and adopt modern technologies while improving its service delivery. These costs are inevitably passed to the consumer, who either pays more or enjoys low internet quality.

Multiple taxes impact all Nigerians, not only key actors in the telecommunications sector. How?

Nigerians rely on network providers to conduct their daily lives. The increase in data charges is one of the negative repercussions of our many taxes. There is no denying that network fees have increased recently.

According to a report from 2021, it said, “a clear impact of multiple taxations of telecommunications companies is the degradation of network quality. This mostly occurs when state authorities, in a bid to enforce compliance in payment of taxes, lock up the facilities of telecom operators and deny them access to their sites for refuelling, maintenance or fault resolution.”

Sealing of these sites results in total and partial site outages, adversely affecting the quality of service and the customer experience in the polity. According to the report, the effects of such network failures are not limited to the impacted telecommunications network. Still, they may spread to others as affected clients transfer to other network providers when they cannot enjoy service from their current providers, thereby causing Nigerians to suffer the consequences.

A good example, according to the report, mentioned that “telecommunications operators in Kogi State warned that the shutting down of their sites by the Kogi State government in a bid to force operators to pay more taxes and levies could lead to a communications blackout in as many as 11 states.

Experts in the industry also suggest that taxes in the industry be in line with international best practices. This will have a substantial impact on the sector’s expansion and the macro-economic growth of the country.

Recently, the Federal Government of Nigeria announced plans to implement a five per cent excise duty tax on telecom services at a stakeholders’ forum on implementing excise duty on telecommunications services in Nigeria.

The Minister of Communications and Digital Economy, Isa Pantami, has said he is against attempts by the Federal Government to introduce a five per cent excise duty on telecommunication services.

According to him, the move would impact the sector and Nigerians negatively. He disclosed this while speaking in Lagos at the maiden edition of the Nigerian Telecommunications Indigenous Content Expo.

He stated that the telecom sector already contributes a lot to the Nigerian economy and urged the government to consider taxing other sectors of the economy that were not contributing to national development.

Telcom companies claim that over 38 different taxes and levies have been placed on their activities by the various levels of government in Nigeria and by various government agencies. They view this as a threat to their companies and future investments in the sector.

At a time like this, when there is a shift towards the full implementation of 5G and the recommendations of the Nigerian national Broadband plan 2020-2025, a level playing field that will guarantee the ease of doing business by telecom operators is needed.

This will attract investments into the sector, guarantee the predictability and fairness businesses need to pursue and realise their objectives and ensure that the country’s journey to a digitally enabled economy remains on Fastrack.

There is no doubt that the government has the authority to levy taxes on companies that operate and gain from the public facilities, infrastructure, and social services it offers. However, it is anticipated that a balance may be found between the legitimate demands if the industry grows from its present position, continue to be an investor’s destination, and compete favourably in the international arena.

Taxes in the telecommunications sector should be consistent with those in other industries and with global best practices. Investment decisions are impacted by tax and levies uncertainty. Anticipated taxes and levies are expectedly factored into the price of services and goods and ultimately passed on to customers.