- Nigeria's Federal Government has suspended the 5% excise duty on telecommunications.
- Isa Pantami, the Minister of Communications and Digital Economy announced this on Monday, September 5, 2022, when he launched a committee to review the 5% excise duty.
Pantami will chair the committee. And members will include the Minister of Finance and National Planning, the Chairman of the Federal Inland Revenue Services (FIRS), the Executive Vice Chairman (EVC) of the Nigerian Communications Commission (NCC), and representatives from all Nigerian telecom companies.
Recall that in July 2022, the Federal Ministry of Finance, Budget, and National Planning notified the telecom sector of the government's plan to impose a 5% excise duty on telecom operations, in addition to the 7.5% VAT that all sectors of the economy pay for goods and services rendered.
The Association of Licensed Telecom Operators in Nigeria (ALTON), however, criticised the proposed tax and claimed it would stifle telecom penetration and place undue strain on subscribers' ability to use telco services.
At the inaugural meeting yesterday, Pantami argued that the move would raise the cost of telecommunications services, further impoverish Nigerians, and widen the country's telecom access gap.
He also criticised the timing and process of imposing the tax on the industry, claiming that part of the government's responsibility is not to exacerbate citizens' problems.
According to the Minister, the telecom industry already contributes 2% excise duty and 7.5% VAT to the economy.
He claimed that the ICT sector, particularly the telecommunications sector, is overburdened by 41 federal and state taxes, which he calls "multiple taxes" because they are similar levies collected on both levels.
So, the government must take precautions to avoid jeopardising its achievements.
Pantami recounted several positive developments in the sector in the past three years.
“In the last quarter of 2020, ICT alone, without including digital services, contributed 14.70 per cent to the GDP. In the second quarter of 2021, we saw another record where the sector contributed 17.90 per cent to the GDP.
“The last record was in the second quarter of 2022 when ICT contributed 18.44 per cent to GDP. By implication, this sector has contributed more to the economy," Pantami concluded.
Consequently, increasing excise duty should be discouraged because it only creates "additional hardship.”