Nigerian Government removes Excise Duty on telecoms services for consumers

*Prof. Isa Ali Pantami, Minister for Communications and Digital Economy, discloses the Federal Government has exempted the telecoms sector from other sectors to pay 5 percent Excise Duty to alleviate telecoms consumers’ sufferings in the West African country

Gbenga Kayode | ConsumerConnect

The Federal Government has announced the removal of Excise Duty for the telecoms sub-sector of the Nigeria Digital Economy industry in line with the recommendations of the Committee it earlier constituted to review the applicability of the Duty to the telecoms sector.

ConsumerConnect reports the telecoms sector of the Nigerian economy is one considered to be already overburdened with taxation and sundry levies in the digital ecosystem.

Telecoms consumers

Prof. Isa Ali Ibrahim Pantami, Honourable Minister for Communications and Digital Economy,  disclosed this Tuesday, March 21, 2023, at a media briefing organised to provide updates on the status of the 5 percent Excise Duty.

It is recalled the Minister, August 2022, had opposed the applicability of the Duty to the important telecoms sector August 2022, after which President Muhammadu Buhari suspended its implementation in the sector.

Buhari later constituted a Presidential Review Committee on Excise Duty in the Digital Economy sector to address this and related concerns of the industry stakeholders.

Pantami, who is the Chairman of the Committee specifically, set up to review the proposed Excise Duty in the telecoms sector, said the Committee had carried out its national assignment and accordingly, submitted its report to the President, justifying why the sector should be exempted.

The Committee’s justifications for exemption of telecoms

The Minister noted the Committee’s submissions could be summed up in three arguments put forward to justify why additional burden in form of taxes or any level should not be imposed on the telecoms sector in Nigeria.

He explained the move was to prevent a reversal of the significant contribution the telecoms sector is making to the growth of the Nigerian economy.

Pantami also said: “Our justifications are based on three premises: First, is the fact that operators in the telecoms sub-sector of the digital economy industry currently pay no fewer than 41 different categories of taxes, levies and charges.

Second, that telecoms has continued to be a major contributor to Nigerian economy in terms of Gross Domestic Product Contribution (GDP).

“The third ground for contesting the Excise Duty in telecom sector is the fact that, despite increase in the cost of all factors of production across sector, and naturally leading to increase in costs of products and services, telecom sector is the only sector where cost of service has been stable and in many cases continued to go down over the past years and therefore, adding more burden will destroy the sector,” the Minister said.

According to Pantami, the President, having looked into the arguments put forward by the Committee and relying on the provision of the Section 5 of the Nigerian 1999 Constitution (as amended), has therefore, exempted telecoms sector from the list of sectors to pay the Excise Duty as stated in Finance Act of 2021 and other subsidiary legislation, all of which are not as superior as the Constitution which permits the President to grant such waiver.

How Buhari approved  recommendations for Telecoms exemption

Prof. Pantami further 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 percent 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 telecoms 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 5 percent excise duty.”

Exemption a relief for telecoms consumers in Nigeria, says Pantami

The Minister for Communications and Digital Economy has assured the Nigerian telecoms consumers, that the presidential exemption accorded the telecoms sector shall be sustained by the incoming administration.

Pantami as well stressed that “the decision by the President (Buhari) is not about any political party or any administration but about Nigeria and welfare of Nigerian citizens.”

He also noted that the Digital Economy Sector has continued to contribute significantly to the growth of the Nigerian economy, having contributed 14.07 percent to the GDP in the first quarter of 2020; 17.79 percent in the second quarter of 2021; and 18.44 percent in the second quarter of 2022 respectively.

The sector, said the Minister, has also increased its quarterly revenue generation for government from N51 billion to over N480 billion, representing a growth of 594 percent.

He stated that the cost of buying data also, has reduced from N1,200 in 2019 to N350 currently, despite the increase in the cost of operations, including the energy challenge that has caused the Mobile Network Operators (MNOs) to power basestations with over 32,000 power generating to provide seamless services to their teeming consumers in the Nigerian digital ecosystem.

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