The Federal Government of Nigeria has decided to lower the excise tax on telecommunications services by 5% in order to help Nigerians, according to the Minister of Communications and Digital Economy, Isa Pantami,
This decision was made in accordance with the Presidential Review Committee on Excise Duty in the Digital Economy Sector’s recommendation. At a press conference, Pantami revealed that the proposed 5% excise levy on communications services would no longer be in effect.
The development was welcomed by Pantami, the chairman of the presidential review committee established to examine the application of excise duty in the telecom sector.
I’m pleased to inform you that President Muhammadu Buhari, GCFR, has authorised the exclusion of the digital economy sector from the requirement to pay a 5% excise duty. He spoke.
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Speaking to journalists, Pantami said the decision was made as a result of a compelling argument made to him by the Committee members, who claimed that increasing the burden on the telecom sector would directly worsen the suffering of Nigerians. This strong argument led to the resolution that other sectors that are not contributing as much to the economy should be pushed to do more and pay the five percent excise duty.
If the tax had been upheld, many businesses would have been affected, in his opinion.
He stated, “Many MSMEs and SMEs depend on the sector for survival; the impact will take a toll on these businesses if the tax is increased.
No need for excise duty for the telecom sector
It is recalled that in July 2022, the Federal Government, through the Minister of Finance Budget and National Planning, Zainab Ahmed, announced plans to implement a five per cent excise duty tax on telecom services in a bid to increase its revenue sources.
“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.” Finance minister had said.
The communications minister said there was no need to do that, explaining that the telecoms sector was already paying 41 categories of taxes, levies, and charges, and any additional tax would affect Nigerians badly as the tax would be paid by the telecom consumers indirectly.
“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.” Pantami stated.
“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. There is no justification for the government to impose more burden on its poor citizens.” He added.
He assures that the tax exemption will be upheld by the incoming administration.
Telecoms subscribers sue FG
Telecommunication consumers under the aegis of the National Association of Telecoms Subscribers, NATCOMS, had sued the Federal Government in 2022 after the announcement from the finance minister to impose a 5% excise duty on telecoms services.
The National President of NATCOMS, Adeolu Ogunbanjo, in February said that the association had filed a suit at the Federal High Court Ikoyi, challenging the government over the many taxes in the sector and increasing cost burden on telecom consumers.
Ogunbanjo however, insisted that the consumer association would continue with its case in court until the government backed up its action with the law even though the Federal government announced the cancellation of the excise duty.
“We cannot withdraw our case until the law is repealed or it has the backing of the law. They need to give it the backing of the law because even though he has said this, the new administration can introduce it again because they will be looking to increase revenue. So, until it is amended or repealed, we will still be in court.” Ogunbanjo stated.