Samson Akintaro 
Companies operating in the Information and Communications Technology (ICT) paid a total of N62.3 billion as Value Added Tax (VAT) in the fourth quarter of 2021. According to the latest VAT released by the National Bureau of Statistics (NBS), this represented 18.72 per cent of the total consumer tax received by government in the quarter.
Major contributors to this VAT pool include the telecoms companies, which have millions of customers with a huge volume of daily consumption of their services. NBS revealed that the ICT sector was one of the three largest contributors to the government’s VAT revenue in the period under review.
“In terms of sectoral contributions, the top three largest shares in Q4’21 were manufacturing with 30.86 per cent; information and communication with 18.72 per cent and mining and quarrying with 9.91 per cent,” NBS stated. Conversely, it disclosed that the activities of extraterritorial organisations and bodies recorded the least share with 0.02 per cent, followed by activities of households as employers, undifferentiated goods and services-producing activities of households for own use with 0.04 per cent; and water supply, sewerage, waste management and remediation activities with 0.11 per cent. According to the Bureau, total VAT for Q4’21 stood at N563.72 billion, a growth of 12.63 per cent on a quarter-onquarter basis from N500.49 billion in Q3’21. It added that local payments recorded in the quarter were N333.29 billion, while foreign VAT payment contributed N103.52 billion.
Emphasising the impact of its operations on the economy, the largest telecommunications firm in Nigeria, MTN, recently announced that it paid a total of N757.6 billion to all government agencies including the Federal Inland Revenue Service (FIRS) last year. According to the company, while the FIRS collected a total of N6.4 trillion tax revenue in 2021, MTN Nigeria paid a total of N618.7 billion in direct and indirect taxes to the FIRS in the tax year, representing approximately 13.5 per cent of the total FIRS collection for the year. Meanwhile, in line with its inter-agency collaboration, the Nigerian Communications Commission (NCC) had recently signed a Memorandum of Understanding (MoU) with the Federal Inland FIRS to ensure the tax agency ascertain accuracy and completeness of VAT elements and other taxes payable in the transactions of telecoms operators.
With the MoU, the FIRS will be able to integrate an application programming interface (API) technology solution with the systems of telecom Operators for independent verification of the amount of VAT that should be paid by mobile network operators (MNO) rather than relying entirely on the Operators’ books of accounts. Speaking during the MoU signing ceremony, the Executive Vice Chairman of NCC, Prof. Umar Danbatta, said that diligence and appropriate due processes were undertaken to conclude the MoU, as the Commission took its time to understand the import of the MoU. According to him, “our concern, as regulator of the telecoms industry, is that we needed to be sure that it is not another way to tax telecoms operators, who are already dealing with multiple taxation issues.
We have also ensured that the integration of the solutions with telcos’ transactions systems will not, in any way, impact the cost and quality of service delivery by the operators to telecoms consumers.” Danbatta, therefore, assured telecoms consumers and stakeholders that the integration of FIRS solution with the Operators’ systems is entirely to ascertain the accuracy of the VAT elements being paid by the Operators on their transactions and will not, in any way, degrade the quality of service delivery or lead to high cost of service to the consumers.
