Nigeria's proposed 9% telecoms tax

Nigeria's telecommunications industry is in the spotlight as the government proposes a 9% Communications Services Tax Bill on voice calls, SMS, data, and other services. Industry players have expressed strong opposition to the proposed tax, citing concerns over its potential negative impact on the growth of the sector. Ade Atobatele, a technology startup expert, recently shared his insights on the matter in an interview with CNBC Africa. Atobatele raised several critical points during the discussion, highlighting the potential consequences of implementing the tax. He emphasized that the telecommunications industry is already burdened with various existing taxes, with the proposed 9% tax further exacerbating the situation. The industry expert questioned the government's rationale behind targeting telecommunications for additional taxation, especially considering the sector's significant contribution to the country's GDP. One of the key arguments against the tax is the potential deterrent effect it could have on foreign investment in the industry. Atobatele pointed out that foreign investors seek locations where they can achieve maximum returns on their investments. If the proposed tax reduces the profitability of the sector, it could lead to a decline in foreign investment, hampering the industry's growth potential. Another crucial aspect discussed was the impact on end users, who are likely to bear the brunt of any cost passed on by telecom companies. Atobatele highlighted the importance of continuous investment in the telecommunications sector to drive innovation and service improvement. The implementation of the tax could impede such investments, ultimately affecting the quality and affordability of services for consumers. The issue of multiple taxation within the telecommunications industry was also raised, with Atobatele urging the government to streamline and harmonize tax policies to avoid burdening the sector with excessive levies. He stressed the need for transparency in revealing how the tax revenue would be utilized, calling for a strategic approach to taxation that prioritizes industry development. In response to the government's argument that there is money to be tapped from the industry, Atobatele emphasized the importance of distinguishing between leveraging industry resources for national development and stifling growth through excessive taxation. He underscored the role of the government as a potential catalyst for industry advancement rather than solely focusing on revenue generation. Overall, the debate surrounding the proposed 9% telecoms tax in Nigeria underscores the complex interplay between taxation, industry growth, and consumer welfare. The outcome of this ongoing discussion will not only shape the future of the telecommunications sector in Nigeria but also have broader implications for the country's economic development.