FG imposes 9% tax on phone calls to finance healthcare fund

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The federal government has introduced a new telecommunications tax to provide finance to subsidise the cost of provision of health care services to vulnerable persons in Nigeria.

This is contained in the National Health Insurance Authority Bill 2021 signed into law by President Muhammadu Buhari on May 19.

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”.

Section 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.

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.

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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.

The National Health Insurance Authority Act further mandated all persons resident in Nigeria to obtain health insurance.

Speaking on the development via his Twitter handle, Taiwo Oyedele, fiscal policy partner and Africa tax leader at PwC, said the new telecommunication’s tax is equivalent to a 9 percent tax on GSM calls since call rates are charged at 11 kobo per second.