Nigerians are now expected to pay tax for the phone calls they make. This is as the Federal Government introduced a new telecommunication tax.
BizWatch Nigeria understands that this development was contained in the National Health Insurance Authority Bill 2021 signed into law by President Muhammadu Buhari.
Interpreting the new tax law, Taiwo Oyedele, a fiscal policy partner and Africa tax leader at PwC, said it is equivalent to a 9% tax on GSM calls since call rates are charged at 11 kobo per second.
“S.26 of this new law imposes a telecommunications tax of not less than 1kobo per second on GSM calls. With call rates at about 11kobo per second, this translates to a 9% tax on GSM calls,” his tweet reads in part.
What the tax on phone calls is designed for
The new telecommunication tax was designed to subsidise healthcare services to vulnerable people in the country.
Section 26(1c) of the act states that the source of money for the Vulnerable Group Fund includes “telecommunications tax, not less than one kobo per second of GSM calls”.
The law defines the vulnerable group as children under five, pregnant women, the aged, physically and mentally challenged persons, and the indigent “as may be defined from time to time”.
It specified that the money from the vulnerable group fund shall be expended to provide subsidy for health insurance coverage of vulnerable persons as determined by the council; and for the payment of health insurance premiums for the indigent.
Thus, to fund it, the law provides several options such as basic health care provision fund to the authority; health insurance levy; telecommunications tax, not less than one kobo per second of GSM calls; money that may be allocated to the Vulnerable Group Fund by the government; motley that accrues to the Vulnerable Group Fund from investments made by the council: and grants, donations, gifts, and any other voluntary contributions made to the Vulnerable Group Fund.
