Senate rejects VAT increment, mulls communication service tax

The Senate, yesterday, introduced an action to impose tax on
Communication Services in the country.

The planned new tax introduction Daily Sun learnt, is targeted
at replacing the proposed 2.2 per cent increase in Value Added Tax
(VAT) being mulled by the Executive.

The Bill for an Act to establish the Communication Service Tax
which was formally introduced on the floor of the Senate yesterday
is being sponsored by Mohammed Ali Ndume.

Addressing newsmen after the first reading of the Bill was taken
by the Senate, Ndume said the imposition of tax on communication
service is a better way of distributing wealth in such a way that
would not affect the ordinary people.

He explained 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 will be pegged at 9 per cent
of the charge for the use of communication services. The Bill 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 Bill further stated that “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.”

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

“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 states: “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.”

The bill further stated that all service providers shall file a
tax return to account for the tax.

“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
stated 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.”