The Nigerian Communications Commission (NCC) and the Federal Inland Revenue Service (FIRS) have agreed to integrate software applications with the systems telecommunications operators to help track the value of all transactions and determine how tax is due on them.
The two agencies have signed a Memorandum of Understanding (MoU) to ensure the FIRS ascertain the accuracy and completeness of value added tax (VAT) elements and other taxes payable in the transactions of telecoms operators.
A statement by the director of public affairs at NCC, Henry Nkemadu said under the MoU signed on Tuesday, 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.
Nkemadu quoted both the Executive Vice Chairman of NCC, Prof. Umar Danbatta and the FIRS Chairman Muhammad Nami as explaining why the MoU would help in establishing the true amount due in VAT payment.
During the MoU signing ceremony in Abuja, Prof. 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.
He said “Our concern, as Regulator of the telecom 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 telecom consumers.”
Danbatta, therefore, assured telecom consumers and stakeholders that the integration of FIRS solution with the Operators’ systems was 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.
In his comments, the Executive Chairman and Chief Executive Officer, FIRS, Muhammad Nami, who thanked the NCC for accepting to collaborate with the tax agency, said the MoU was mainly to ascertain completeness of tax transactions of mobile service providers to the Federal Government due to the shift of physical businesses to electronic-based business activities.
He said, “The API, which was developed in-house, is transaction-based and all we are trying to do is to ensure we have the basis for determining the completeness and accuracy of VAT elements in telecom transactions.”