Telecom Tax in Nigeria: Impact of 5% Excise Duty on SMEs
The Federal Government has reintroduced a 5% excise duty on telecom services in Nigeria. This new telecom tax in Nigeria could significantly impact business operations. Although the policy was paused last year, a circular dated April 20, 2023, confirms that the government intends to proceed with it as part of its 2023 fiscal measures. Telecom providers have already warned that customers will bear the cost.
Rising Costs for SMEs
With inflation at 22.04% and rising, small and medium-sized enterprises (SMEs) must prepare for higher expenses. Businesses that depend on mobile calls to connect with customers and suppliers may see communication costs increase. This could weaken relationships with stakeholders.
Similarly, companies that rely on data for marketing, research, or decision-making will also face higher costs. These rising expenses could affect their ability to remain competitive and agile.
The increased cost of mobile communication and data services may also impact the ability of SMEs to compete with larger, more established businesses that have greater resources to absorb the additional costs. This could lead to market consolidation and reduce competition, which could have a negative impact on consumers.
Some of the strategies that SMEs can consider to mitigate the impact of the new telecom tax include:
1. Reviewing their current mobile communication and data plans to identify areas where they can reduce costs without compromising on quality.
2. One potential solution to offset the impact of the new telecom tax is to explore alternative communication channels that may be more cost-effective, such as email or instant messaging services.
3. Investing in technology solutions that can help streamline operations and reduce the need for mobile communication and data services, such as cloud-based software or collaboration tools.
4. Collaborating with other SMEs to negotiate bulk discounts on mobile communication and data services.
Being proactive in adapting to changes in the business environment is key to staying ahead of the game. Stay informed and be prepared for the future.
Signal Alliance Technology Holdings is one of the leading integrators for corporate businesses in Nigeria. We develop, consult, implement, and manage integrated technologies that reshape the productivity of organizations in the private and public sectors.