The Nigerian Communications Commission (NCC) and the Federal Inland Revenue Service (FIRS) have signed a Memorandum of Understanding (MoU) geared towards ensuring accuracy and completeness of Value Added Tax (VAT) 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) solution with the systems of telecom operators for independent verification of the amount of VAT that should be paid by mobile network operators rather than relying entirely on the operators’ books of accounts.
Speaking during the MoU signing ceremony in Abuja on Tuesday, June 9, 2020, the Executive Vice Chairman of NCC, Prof. Umar Danbatta, said that diligence and appropriate due processes were followed in the MoU as the Commission took its time to understand the import of the deal. 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.”
According to the FIRS Executive Chairman and Chief Executive Officer, Muhammad Nami, the MoU is mainly “to ascertain the completeness of tax transactions of mobile service providers to the Federal Government due to the shift of physical businesses to electronic-based business activities”. Nami noted that the API was developed in-house, and is transaction-based – structured so that the tax agency has a basis for determining the completeness and accuracy of VAT elements in telecoms transactions.”