Buhari exempts telecom sector from proposed 5% excise duty

Minister of Communications and Digital Economy, Isa Pantami, says President Muhammadu Buhari has approved the exemption of the telecommunications sector from the proposed 5 percent excise duty.

Isa Pantami, minister of communications and digital economy, disclosed this on Tuesday at a news conference organised by the presidential review committee on excise duty in Abuja.

In May 2022, Buhari had approved the collection of a 5 percent excise duty on telephone recharge cards and vouchers.

The charge was part of new items on the list of goods liable for excise duty in the country’s Finance Act.

Excise duty is a levy charged at the time of manufacturing. It is also a form of indirect tax on the sale or consumption of certain goods, products, services or activities such as tobacco, alcohol, narcotics, gambling etc., mainly to discourage their use and consumption.

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Nigeria’s Finance Act has extended the list to include beverages, non-alcoholic drinks and many others.

Zainab Ahmed, minister of finance and national budget, had in July last year, said the government would begin the implementation of the 5 percent inclusive excise duty on telecommunications services in Nigeria.

The statement triggered widespread criticism from Nigerians, including telecom operators, and Pantami who faulted the timing and process of implementation, saying he was not informed.

In September, the minister announced that the 5 percent excise duty on telecommunications services had been suspended.

Speaking on the issue at the press briefing on Tuesday, Pantami said Buhari had on March 6 approved the exemption of the digital economy sector from the 5 percent excise duty because it would harm Nigerians.

He said 41 categories of taxes, levies, and charges are already in the digital economy sector; hence there is no justification for an additional excise.

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“There is no need for excise duty in the telecom sector because the industry is already heavily taxed up to 41 taxes,” the minister said.

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“The sector has been contributing hugely to Nigeria’s economy; more tax burden destroys the industry. We increased revenue generated by 594 percent 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.

“Many micro, small, and medium enterprises (MSMEs) and small medium enterprises (SMEs) depend on the sector for survival; if the tax is increased, the impact will take a toll on these businesses.”

On his part, Umar Danbatta, executive vice-chairman, Nigerian Communications Commission, (NCC), reiterated the commission’s commitment to improving the telecom industry.

Danbatta said the reduction of data had been the main target of the commission, adding that the average 1 gigabit of data had dropped to N335 from N350.

He also urged Nigerians to report mobile network operators charging exorbitant prices for data.