FG re-introduces 5% excise duty on telecom services

The Federal Government has again brought forward the implementation of a 5% excise duty on telecommunications services.

The additional tax on telecom services is part of new Fiscal Policy Measures (FPM) for 2023 which was announced via a Circular dated 20 April 2023 signed by the Minister of Finance, Budget, and National Planning, Zainab Ahmed.

This is coming barely a month after the Minister of Communications and Digital Economy, Prof. Isa Pantami, announced that the government had exempted telecom services from the payment of 5% excise duty as stipulated in the Finance Bill 2022.

In the new fiscal policy for 2023, the Minister of Finance, Budget, and National Planning listed the 5% excise duty on telecommunications services as part of the fiscal measures to be implemented this year.

In the Circular titled: ‘Approval for the Implementation of the Fiscal Policy Measures and Tariff Amendments’, the Minister confirmed the implementation of the excise duty on telecommunication services earlier introduced via the Finance Act 2020 and prescribed in the Official Gazette No. 88, Vol. 109 of 11 May 2022 approved by the President.

The tax is applicable on mobile telephone services (GSM), fixed telephone and internet services, both postpaid and prepaid at the rate of 5%.

READ ALSO: Akabueze differs with Pantami over suspension of 5% telecom tax

The policy further introduces additional excise taxes ranging from 20% to 100% increases on previously approved rates for alcoholic beverages, tobacco, wines, and spirits effective from 1 June 2023.

These are further increases over and above the 2022 FPM’s approved Roadmap for 2022-2024 in the form of new and higher ad valorem excise duties and specific rates. The excise duty rate on non-alcoholic beverages is however retained at the rate of N10 per litre.

Commenting on the circular, the Fiscal Policy Partner and Africa Tax Leader at PwC, Mr Taiwo Oyedele, faulted the new taxes saying they smacked policy inconsistency on the part of the government.

Oyedele added that there was no information to suggest that a proper impact assessment was carried out to determine the impact of the new taxes on affected stakeholders across the value chain. According to him, contrary to the requirements of the Approved 2017 National Tax Policy, there was no engagement with critical stakeholders especially the industries that are directly affected by the changes.

Earlier in March this year, the Minister of Communications and Digital Economy, Isa Pantami, declared that the government had exempted telecom from the proposed 5% duty.

According to him, the exemption was in line with the recommendations of the Committee it constituted to review the applicability of the Duty to the telecom sector which is considered already overburdened with taxation and sundry levies. The new fiscal policy measure has, however, created confusion over the matter.