FG Bows to Pressure, Suspends 5% Excise Duty on Telecom Services

•Inaugurates committee to review policy

Emma Okonji in Lagos and Oghenevwede Ohwovoriole in Abuja

The federal government has bowed to the pressure from the Ministry of Communications and Digital Economy, the Nigerian Communications Commission (NCC), telecom operators and subscribers that refused the planned imposition of five per cent excise duty on telecom operations.

The federal government yesterday announced the suspension of the proposed five per cent excise duty and inaugurated a committee chaired by the Minister of Communications and Digital Economy, Dr. Isa Ali Ibrahim Pantami, to immediately review the policy.

Pantami, who inaugurated the Committee on the directive of President Muhammadu Buhari, with the Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed as member, said the decision to suspend the policy would be made after the committee completes its report.

Pantami said the suspension of the policy that was directed by Buhari, followed his petition as the Chairman of the Presidential Council on Digital Economy and eGovernment. According to him, the five per cent levy has the potential to impact negatively on the digital economy sector, and particularly, telecommunications, which is already overburdened with a plethora of taxes totalling about 41 categories.

He said some of them were multiple taxations because other tiers or levels of government were imposing same levies that mobile network operators (MNOs) had already paid to the federal government.

“Excessive taxation has been a central challenge of the Information and Communications Technology sector”, he said, arguing that it is unfair to overburden such a sector that is so central to the nation’s growth and development and especially because the sector rarely receives subsidy which other sectors have enjoyed.

“Despite the spiraling inflation, and cost of production, particularly the energy factor, the network service providers have not increased prices of services. I challenge the gentlemen of the press here to name one sector that has not witnessed price increases in services in the last three years. It is only in telecoms that prices have been stable,” Pantami said.

The Federal Ministry of Finance, Budget and National Planning, had last month, notified the telecom sector of the intention of the government to introduce a five per cent excise duty on telecom operation, in addition to the 7.5 per cent Value Added Tax(VAT) that all sectors of the economy pay for goods and services rendered.

Disturbed by the proposed plan, Pantami, the NCC, telecom operators and subscribers had rejected the plan, and described it as multiple taxes.

Pantami had faulted the timing and process, and had insisted that part of the responsibility of a responsive government was not to increase the problems of the citizens.

Pantami had said: “If you look at it carefully the sector contributes two per cent excise duty, 7.5 per cent VAT to the economy and you want to add more to create additional hardship. This cannot be tolerated at this time and it will be resisted.”

While inaugurating the committee yesterday, Pantami listed the contributions of the telecom sector to country’s Gross Domestic Product (GDP) and gave reasons why the sector should be encouraged to do more.

Other members of the committee included the Executive Vice Chairman and Chief Executive Officer, NCC, Prof. Umar Danbatta; the Executive Chairman of Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami; and the representatives of Mobile Network Operators (MNOs).

Pantami recalled several positive developments in the sector that needs to be sustained through support of the government.

“Three unprecedented positive developments have occurred in the digital economy sector in the last 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 where ICT contributed 18.44 per cent to GDP. By implication, this sector has been contributing a lot to the economy,” Pantami said.