The Lagos Chamber of Commerce and Industry has declared that there is the likelihood that the Communication Service Tax Bill currently before the National Assembly will be challenged in the court of law because it raises the issue of double taxation, among others.
According to the chamber, tax which is to be imposed and collected monthly on charges payable by users of electronic communications services such as voice calls, SMS, MMS, data usage, pay-per-view TV and other services supplied by service providers, will amount to double taxation because the Value Added Tax Act already imposes a tax of five per cent on the supply of goods and services including telecommunications services.
The chamber’s position was contained in a paper presented by the Commercial Law and Taxation Committee of the LCCI on Wednesday on the CST bill.
The paper stated in part, “Double taxation occurs when the same tax authority levies two or more taxes on the same income or tax basis. It can be posited that the CST bill potentially raises the issue of double taxation since the Value Added Tax Act already imposes tax of five per cent on the supply of goods and services, which includes telecommunications services.
“Taxes should be economically neutral and equitable and should not induce taxpayers to change their behaviour in response to the tax except in special cases such as when government wants to discourage activity in a particular sector.
“The CST bill will make communication services more expensive and this will affect consumer behaviour with respect to the demand and supply of these services.”
In her opening remarks, the President, LCCI, Dr. Nike Akande, noted that even though the government sought to diversify its revenue base in the light of dwindling oil revenue, the private sector would like to see an investment-friendly tax environment due to the prevailing high cost of doing business in Nigeria.