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Nigeria: Red Flag – Nigeria’s Corporate Income Tax Rate to Hit 36% If…

With the proposed new National Information Technology Development Agency, NITDA bill 2007, it’s either someone somewhere is drunk with desires to fulfil a negative personal ambition or NITDA is getting over ambitious to regulate the entire ICT sector, relegating the Nigerian Communications Commission, NCC to the background.

Whichever way, industry practitioners say both do not mean well for the country. The bill sponsored by NITDA and sent to the National Assembly, NASS is to repeal and re-enact its existing Act, No 28 2007 to provide for the Administration, implementation, regulation of information technology systems and practices as well as digital economy in Nigeria and for related matters.

According to NITDA, the new bill is aimed at addressing contemporary digital issues, revamp Nigeria’s economy, build trust and protect the rights and interests of players in the ecosystem

However, at a closer look, what the new bill will inadvertently do is taint the country’s reputation as the fastest growing telecom economy and destroy the framework upon which that status was achieved.

Since the bill made its way into the National Assembly, seeking to be passed into law, the entire ICT sector has not been the same.

Different Lawyers, particularly those with ICT bias have examined the bill and said it should be thrown away now before the country regrets its effects in the future. Many ICT media professional have looked at it and said “God forbid”!

Notable industry practitioners have expressed fears that even as a bill, it may have started dropping the country’s foreign direct Investment, which experience shows doesn’t thrive on unstable political economy and unstructured legal systems.

Yet, some interests are still pushing a bill which tends to kill a well established agency of government with proven track records of driving country’s prosperity through enabling laws.

The NASS committee on ICT has been seeking opinions with the view to examining what impact the bill will make on the sector if passed into law. The committee’s most recent sitting was February 2, 2023 and Hi-Tech has obtained a letter written to the Committee by telecom operators in Nigeria highlighting dangers of passing such a bill into law.

The letter routed through their umbrella body, the Association of Licensed Telecom Operators of Nigeria ALTON, stated that it would amount to wasting of resources to continue reviewing the proposed bill just as passing it into law will spell doom.

The telcos were vehement on the devastating blows the bill will immediately deal to the telecom sector in particular and the entire Nigerian economy at large.

Chief among the effects will be the destruction of the Nigerian Communications Commission, NCC’s autonomy, duplicating the Nigerian Communications Act, NCA Act of 2003 and interloping in the commission’s functions.

On the general economy, the telcos say passing the bill into law will aid it in surreptitiously raising the country’s corporate income tax rate to over 36 percent, which will be the highest in the world.

Part of the letter signed by the group’s Chairman, Engr Gbenga Adebayo and Executive Secretary, Gbolahon Awonuga reads:” We had taken a careful read of the Bill and wish to bring the following aspects of the Bill to your attention.

Powers of the Agency

By the provisions of Section 6(1) and (12) of the Bill, the Agency is empowered to implement all government policies on information technology, IT and digital economy, and issue and renew licenses and authorizations for the provision of IT and digital services.

What constitutes IT and digital economy are defined in Section 33 of the Bill as any aspect of the Nigerian Economy that is based or driven by digital technologies, while Information Technology, is defined as all forms of technology used to create, store, exchange and use information in its various forms (business data, voice, conversation, still images, motion pictures, multimedia presentations and other forms including those not yet conceived.

” Distinguished Members of the Senate Committee ICT and Cyber Security, going by this, it is apparent that, the Agency is being empowered to regulate activities which are already under the purview of the Nigerian Communications Commission, NCC”.

Presently, the NCC regulates the activities of all telecommunications companies that fall within the purview of digital economy and information technology.

Specifically, the NCC with regards to digital economy is responsible for the monitoring and implementation of the National Broadband Plan (2020 – 2025) and the National Digital Economy Policy and Strategy.

“Closely related to the above are the provisions of Section 6(2) of the Bill, which empowers the Agency to test and approve the use of information technology infrastructure and services before adoption in Nigeria and Section 20, which clothes the Agency with powers to make regulations and issue licenses and authorization for operators in the information technology and digital economy sector.

“This again replicates the power of the NCC, which includes carrying out type approval tests on communications equipment and issuing certificates on the basis of technical specifications and standards prescribed from time to time by the Commission as stipulated by the provisions of Section 4(n) of the Nigerian Communications Commission Act (NCA), 2003, and for which the NCC Type Approval Regulations exists.


“If the Bill is passed as presently constituted, there is the risk that the Agency, acting properly under the Bill may issue regulations, guidelines and standards with regards to the use of information technology and digital services, which will conflict with the functions of the NCC. It will also result in double and possibly conflicting regulation for telecommunications companies in Nigeria.

In the circumstance, we humbly request that since telecommunications are already being regulated by the NCC, we be excluded from group of persons who will come under the control and regulation of the Agency with regards to information technology and digital services.

National IT Development Fund

“The Bill, by Section 13, seeks to establish a Fund, which is to be known as the National Information Technology Development Fund which shall be used for the advancement of the country’s digital economy objectives and related purposes.

“In order to fund the activities of the Fund, the Bill provides that, Companies and Enterprises, including mobile and fixed telecommunications companies with a turnover of N100,000,000 (One Hundred Million Naira), shall pay a levy of one percent of the profit before tax.

While ALTON as an association and our members as individual corporate entities are always observant of their tax obligations and other responsibilities, we submit that the tax sought to be introduced by the Bill, in addition to existing taxes and levies will overburden telecommunication companies.

“Presently, the telecommunications companies in Nigeria are overburdened with over 39 different taxes and levies, a bulk of which are multiple or excessive. If this new tax is added to existing taxes, it will effectively increase Nigeria’s corporate income tax rate to about 36% which is one of the highest rates in the world.

This will not give a good image about our country. It will give the impression that our Campaign for ease of doing business in Nigeria is not genuine”.

Power to impose administrative sanctions, seal premises

The telcos in the letter also noted that: “By the provisions of Section 6(7), the Agency has the jurisdiction to enter premises, inspect, seize, seal, detain and impose administrative sanctions on erring persons and entities who contravene any provision of the Bill.

While our members as law abiding entities are not averse to being regulated, nor do they have the intention to disobey any rule or laws of our country, we feel that Section 6(7) is too broad and could give room for abuse of power by the Agency. Our fears are founded on the fact that, the Bill does not provide for prior warning/notice to be issued to the defaulting person or entity before the Agency exercises the power to enter premises, inspect, seize, seal, detain and impose administrative sanctions on erring persons and entities.

“Although the Section states that such actions by the Agency are subject to orders of a court of competent jurisdiction, the Bill fails to stipulate whether the Agency is to first seek and obtain orders of court before exercising the powers to sanction defaulting persons or entities or such orders could be obtained after the Agency had exercised its powers under the Bill. Where the order of court is to be first sought and obtained before the Agency undertakes any of the actions mentioned in Section 6(7), the Section is silent as to whether the orders are to be obtained ex-parte or on notice to the person or entity against whom the orders are sought to be obtained.

“While the above steps, intended to ameliorate any excesses are proposed, we will prefer the total exclusion of telecom companies from the ambit of the Agency’s operations as there are no provisions for its liaising with the NCC in promulgating any regulations.

Again, the fears that the bill’s regulations may conflict with existing NCC regulations or duplicate and further complicate them are not unfounded since there is no requirement by the Bill for synchronization between the Agency and NCC”.

Classes of Licences and Authorisations

By the provisions of Section 21 of the Bill, the Agency is empowered to classify its licenses and authorizations under any of the following: (1) Product License; (2) Service Provider License; and (3) Platform Provider License. Besides mentioning the various categories of licenses, the Bill does not define what these classes of licenses mean, neither is the Bill explicit on the types of activities which are covered by each class of license.

The danger in the Bill not defining these licenses and category of activities which they cover is that, the Agency may inadvertently appropriate more powers to itself than intended to be delegated to it by the legislature or, the Agency, may by error, seek to regulate activities already under the regulation of other regulatory agencies”.

The operators ended the letter, by reminding the committee members that the role of NITDA as an agency is for the development of the ICT sector and therefore the bill should have focused on empowering the agency to do and not to become another regulator for the industry thereby causing unnecessary confusion and de-establishing the gains the sector has made so far to the Nigeria economy.

They stoutly claimed that their existence as a going concern would be threatened by effect of the Bill, if passed as presently constituted.

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