The Federal Government has announced the cancellation of its proposed 5% excise charge on telecommunications services. The government stated that this was in accordance with the recommendations of a committee formed to assess the application of excise tax in the telecom industry, the Presidential Review Committee on Excise Duty in the Digital Economy Sector.
Isa Pantami, the Minister of Communications and Digital Economy, announced this at a news conference on Tuesday.
Pantami, who is the chairman of the committee, said, “I am happy to report to you that President Muhammadu Buhari, GCFR, has approved the exemption of the digital economy sector from the five per cent excise duty to be paid and this is because of the strength of the argument presented to him by the Committee that additional burden on telecom sector will increase the sufferings of Nigerians and that other sectors that are not making as much contribution to the economy should be challenged to do more and pay the five per cent excise duty.”
According to him, if the tax had been upheld, many businesses will have felt its impact. He said, “Many MSMEs and SMEs depend on the sector for survival; if the tax is increased, the impact will take a toll on these businesses.
Pantami stated that the telecoms sector was already paying 41 categories of taxes, levies, and charges. He added, “There is no need for excise duty in the telecom sector because the industry is already heavily taxed up to 41 taxes. The sector has been contributing hugely to Nigeria’s economy; more tax burden destroys the industry.
“We increased revenue generated by 594 per cent from N51 billion quarterly to N481 billion quarterly. This is the only sector where the prices of services have been reduced. here is no justification for the government to impose more burden on its poor citizens.”
He stated that the tax exemption will be maintained by the new administration. In order to improve its income streams, the Federal Government announced intentions to put a 5% excise duty tax on telecom services in July 2022.
The Minister of Finance, Budget, and National Planning, Zainab Ahmed, made the announcement through the Ministry’s Assistant Chief Officer, Mr Frank Oshanipin.
She said, “The duty rate was not captured in the Act because it is the responsibility of the President to fix rates on excise duties and he has fixed five per cent for telecommunication services which include GSM. It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue.”
At the time, telecom companies stated that the tax would be paid by telecom consumers, increasing consumption tax on telecom services to 12.5 per cent. The government later suspended the implementation of the tax and set up a committee to review it.
During the process, a document titled ‘Invitation to a One Day Public Hearing and Submission of Memoranda on the 2022 Finance Bill,’ indicated that the government might be considering the implementation of excise duty in 2023.
To counter this, telecommunication consumers under the aegis of the National Association of Telecoms Subscribers sued the Federal Government in court.