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How much longer will players in the telecoms sectors suffer multiple taxations in Nigeria?

Mobile is the main gateway to the internet for consumers, yet governments are increasingly imposing – in addition to general taxes.

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How much longer will players in the telecoms sectors suffer multiple taxations in Nigeria?

Mobile is the main gateway to the internet for consumers, particularly in developing countries. Yet governments are increasingly imposing – in addition to general taxes – sector-specific taxes on both mobile consumers and operators. This poses a significant risk to the accessibility of mobile services, limiting the reach of the social and economic benefits associated with mobile technology.

To effectively deliver high-quality services to consumers, telecommunication providers need an active presence in multiple locations. However, this can generate additional complexities from a tax perspective because government agencies obligate tax authorities to impose multiple taxations on the service provider. The more locations, the greater the taxes. Such taxes and levies affect investment decisions.

The tax liability of a telecommunications provider includes more than just the general taxes imposed on all companies in Nigeria. There are sector-specific and other “tailored” taxes and levies that further reduces profitability and productivity. Sector tax levies include the Annual Operating Levy (AOL), The National Cyber Security Fund, the National Information Technology Development Fund (NITDF) Levy, and the Right of Way Charges. Anticipated taxes and levies are built into service and product costs which are ultimately passed onto mobile subscribers.

How much longer will players in the telecoms sectors suffer multiple taxations in Nigeria?

In addition, the sector must grapple with duplicated taxes applied by different tiers of government. Telecommunication operators pay levies to specific government agencies: Consumer Protection Council, the Nigeria Lottery Commission, and respective Federal and State Ministries of Environment authorities in every state and local government they operate in.

According to a 2019 report by Global System for Mobile Communications Association, titled “Rethinking Mobile Taxation to Improve Connectivity” sector-specific taxes are not aligned with best-practice principles of taxation. Best-practice specifies taxes should be broad-based and account for sector/product externalities. Following a disinclination to pay inessential and heavy tax levies, some telecommunication operators have been compelled to shut down parts of their operations.

For example, in November 2018, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) disclosed that approximately 150 telecommunications base stations closed in Kogi State and the Federal Capital Territory as a result of unmet tax demands. According to ALTON, the Kogi State Government requested telecom operators pay over 36 statutory and non-statutory taxes and levies through its Ministry of Environment and Physical Planning, Ministry of Environment and Mineral Resources, Kogi State Environmental Protection Board. All of which were championed by the Kogi State Internal Revenue Service.

During the recent Power and Telecommunications Synergy Conference sponsored by IHS Nigeria in Lagos, MainOne, Regional Executive – West Africa, Kazeem Oladepo, stressed that connectivity, economic growth, investment and fiscal stability in Nigeria can only be achieved if taxes levied on telecommunications operators are reduced. He argued, “Governments across the world have recognized the importance of policies that support the telecoms and ICT sector, resulting in digital agendas that set ambitious connectivity objectives. In Nigeria, there has to be a reduction in sector-specific taxes, complexity and uncertainty of taxes and fees on the mobile sector, and consumer taxes that target access to mobile services.”

Governments have the right to enforce taxes on businesses that operate and benefit from public amenities, infrastructure and social services. However, the expectation is that an equilibrium should be struck between the legitimate expectations of a government and a fairness for telecommunication businesses. Currently, Nigeria is far from this.

So, how does the Nigerian Government hope to continue receiving a consistent revenue source from its telecommunications sector when the industry is overwhelmed by multiple taxations from the same government? How does one convince an investor to invest in a system that is running on large losses from multiple taxations? How can the telecommunications sector finance numerous projects which will supplement advanced broadband connectivity in Nigeria when it must deal with unforeseen expenditures in the camouflage of taxation? Ultimately multiple taxations are not just a threat to individual telecommunication companies, but a threat to further investments in the industry as whole and in turn, Nigeria’s economic development.

"NM Partners" represent articles published in partnerships with Corporate Organisations, Government and Non-Governmental Institutions, and other stakeholders seeking to publish content on Nairametrics. Content includes Press Releases, Targeted content, and other forms of corporate communications targeted at our readers. Some of these content are paid for.

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JustLiquidity; The best place for easy and decentralized Crypto

JustLiquidity aims to be the leading top decentralized exchange on the Binance SmartChain, with revolutionary developments and product’s

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JustLiquidity; The best place for easy and decentralized Crypto

Introduction of Julwallet feature (NFTs minting and NFTs shop)

NFTs and NFT artists have been trending a lot in the African art space

NFTs or NonFungibleTokens as it stands, are redefining the very outlook of various forms of creative work like art, video, music, characters in a game etc. NFTs by their very definition represents unique data on the digital ledger or blockchain. Unlike Fungible tokens on the blockchain, these tokens are not interchangeable as they represent something unique in themselves.

Justliquidity has introduced a few products to the general public that makes creating, storing, selling and sending NFTs all on the Binance SmartChain as BEP1155 token, the Julwallet is one of its revolutionary products that has all these features in it and more in development currently.

Our Telegram group and Twitter handles are:

JustLiquidity
https://t.me/justliquidity

JustLiquidity Africa
https://t.me/JustliquidityAfrica

https://twitter.com/JustLiquidity?s=09
https://twitter.com/JulSwap?s=09

https://justliquidity.medium.com/

A few of other products JustLiquidity are:
The most popular one is julswap.com which is our popular decentralized exchange

Our community token JULD can also be used for bookings on Travala.com

Our Blackhole is a fully Decentralized protocol for private transactions on the #BinanceSmartChain.

We also have a token Bridge between the Ethereum blockchain and the Binance SmartChain .

$Juld can also be used for payments on shopping.io

More features coming soon including our Julpad which is which is launchpad for new projects and also a debit card feature.

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Mastercard New Payments Index: Consumer appetite for digital payments takes off in Nigeria

78% of consumers in Nigeria say digital payments methods help them save money.

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  • 96% of consumers in Nigeria are considering emerging payments such as wearables, biometrics, digital wallets and currencies, and QR code, in addition to Contactless, according to the Mastercard New Payments Index
  • 86% of Nigerian consumers have access to more ways to pay compared to this time last year
  • 78% of consumers in Nigeria say digital payments methods help them save money
  • 81% say they are more loyal to retailers who offer multiple payment options and would shop at small businesses if offered more diverse ways to pay

As the world went into pandemic lockdown in 2020, consumers shifted their spending habits to embrace contactless tap-and-go payments and online shopping. As stores closed and social distancing took hold, retailers worldwide moved their businesses online, embraced e-commerce and explored the potential of new ways to pay. More than a year later, research from Mastercard shows that the adoption of new payment technologies is rising, and consumer appetite for new, fast and flexible digital experiences continues to grow.

The Mastercard New Payments Index shows 96% of Nigerian consumers will consider using at least one emerging payment method, such as cryptocurrency, biometrics, contactless, or QR code, in the next year.

Over two-thirds of respondents (66%) agree they have tried a new payment method they would not have tried under normal circumstances, but the pandemic has galvanized people to try flexible new payment options to get what they want, when they want it. With this interest and consumer demand also comes a greater expectation for businesses to provide multiple ways to shop and pay. In fact, 81% of Nigerian consumers say they are more excited about shopping at retailers who offer the latest payment methods.  Additionally, (78%) Nigerian consumers say that digital payment methods help them save money.

“The pandemic made us think differently, partly out of necessity,” said Craig Vosburg, Chief Product Officer at Mastercard. “To deliver the choice and flexibility that consumers need – and increasingly expect –retailers worldwide need to offer a range of payment solutions that are easy to access and always on.  As we look ahead, we need to continue to enable all choices, both in-store and online, to shape the fabric of commerce and make the digital economy work for everyone.”

Contactless technology was the digital catalyst to explore new payment options because of its fast, secure, and touch-free experience. Between the first quarter of 2020 and the same period in 2021, more than 100 markets saw contactless as a share of total in-person transactions grow by at least 50 percent.  A year into the COVID-19 pandemic, contactless is showing its staying power and dynamism – in the first quarter of 2021 alone, Mastercard saw 1 billion more contactless transactions worldwide as compared to the same period of 2020. All signs point to a continued growth path for contactless, with nearly 7 in 10 consumers globally anticipating using a contactless card this year.

“The world as we now know it has changed dramatically since the outbreak of the pandemic, accelerating long-term shifts in consumer transaction and payment methods. We continue to work with our merchants, fintechs and banking partners to rapidly innovate payment options that meet consumer needs while ensuring we drive financial and digital inclusion,” said Raghav Prasad, Division President, Mastercard, Sub-Saharan Africa.

Looking to the future, digital currencies and wallets, wearables, biometrics, contactless and QR codes are trending as emerging payments technologies as people’s comfort with them and understanding of them increases and the use of cash decreases. In fact, 86% of consumers in Nigeria have more ways to pay compared to this time last year. The exploding interest in new payment technologies may encourage businesses to expand their options at checkout. The Mastercard New Payment Index found:

  • Cryptocurrency1 Gains Ground – Today consumers can buy, sell, and trade cryptocurrency as a commodity or investment. Consumers are also increasingly showing interest in being able to spend crypto assets for everyday purchases. As global interest in digital currencies continues to accelerate, 6 in 10 people (65%) in Nigeria say they plan to use cryptocurrency in the next year, with 76% noting they are more open to using it than they were a year ago. While consumer interest in cryptocurrency – especially floating digital currencies such as Bitcoin – is high, work is still required to ensure consumer choice, protection, and their regulatory compliance. Earlier this year, Mastercard announced that it will start supporting select cryptocurrencies directly on its network.
  • Biometric Payments are More Trustworthy – Perceptions of safety and convenience have been front and center for people over the past year. 49% of Nigerian consumers say they plan to use biometric verification methods like gait or walk assessments and fingerprint authorization. In fact, over 6 out of 10 people (66%) feel safer using biometrics to verify a purchase than entering a pin.
  • QR Codes are Cleaner and More Convenient – Growing markets are leveraging QR-based options as a clean and convenient way to interact with merchants. Consumer desire for clean and convenient ways to pay will remain post-pandemic. 54% of people in Nigeria expect to use more payment technologies like QR codes in the next year. Consumers also find that that QR codes are cleaner (75%) and more convenient (77%) for in-person payments and have a significant potential to reduce cost of payment acceptance and increase financial
  • Digital Wallets Surge in Popularity – Nigeria is seeing a surge in the popularity of digital wallets. 73% of Nigerian consumers said they were likely to use digital wallets next year. 66% of shoppers even say that they feel safer storing their card information in one place such as a digital wallet.

To Meet People’s Demands, Businesses Forced to Jump into Emerging Payment Trends

With consumer interest around new payment technologies, the expectation for businesses to adapt for the long-term is here to stay. Over three in four Nigerian consumers (84%) say that they would shop at small businesses, if they offered more payment options, and 81% noted being more excited to shop at retailers that can offer the latest payment methods, and an equal proportion (81%) said they would be more loyal to retailers who offered multiple payment options.

This behaviour shift is reinforced by the desire for consumer choice – with 89% saying that they expect to make purchases when they want and how they want. The businesses that can provide multiple ways to shop and pay are best positioned to meet these expectations. As the demand for emerging payments and choice continues, it requires a wider range of payment solutions, insights, and products to meet the accelerating enthusiasm for the future state of pay.

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