Ease of Telecom operations in Nigeria after suspension of proposed 5% excise duty

The Nigerian government has suspended its plans of charging its telecoms industry excise duty fixed at 5 per cent. This was made effect due to concerns of the burden shift on consumers of telecom services since a 7.5 per cent Value Added Tax (VAT) was already in scheme – as demands by the Federal government.

In order to raise revenue, the Nigerian Minister of Finance, Budget and National Planning, Dr Zainab Ahmed called for another source of proceeds by shifting from funds realized in the mainstay oil sector and paying attention to other sectors particularly the telecom industry in July of this year. “It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue”.

Ahmed was represented by the Assistant Chief Officer of the Ministry, Frank Oshanipin in the event organized by the Nigerian Communications Commission (NCC). In his statement, the five per cent excise duty has been in the Finance Act 2020 but was not implemented. “The duty rate was not captured in the Act because it is the responsibility of the president to fix rate on excise duties and he has fixed five per cent for telecommunication services which includes GSM”.

According to Chairman, Association of Licensed Telecommunications Operator of Nigeria (ATLON), Gbenga Adebayo, the telecom industry cannot afford remitting other taxes to the Federal Government. “It means that subscribers will now pay 12.5 percent tax on telecom services, we will not be able to subsidise the five per cent excise duty on telecom services”.

“This is as a result of the 39 multiple taxes we are already paying coupled with the epileptic power situation as we spend so much on diesel”, he added.

Meanwhile, the Minister for Communications and Digital Economy, Isa Ali Pantami stated that excise duties are only meant for items of luxury – not phone calls and data. “It is my responsibility to ensure we are just and fair to the operators, government and most importantly the consumers. Based on the constitution and being the representative of Buhari in the sector, I rejected that wholeheartedly”.

“I formalised my position and explained to him in a letter that could be referred to as a petition, because excise duty was usually fixed on luxury products. I told the president in the letter that if care is not taken, the attempt will destroy the digital economy sector that is becoming the backbone of our economy”, he said explaining that the President, Muhammadu Buhari has agreed to his petition.

This was disclosed on Monday, September 5 in Abuja when he inaugurated a committee to review the five per cent excise duty. Pantami announced the members of the committee to include the Minister of Finance, Budget and National Planning, and Chairman of the Federal Inland Revenue Services (FIRS), Executive Vice Chairman (EVC) of the Nigerian Communications Commission (NCC) and Representative of all Telecom companies in Nigeria.