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HomeBusinessNigeria approves exemption of telecom sector from 5% excise duty ~Pantami

Nigeria approves exemption of telecom sector from 5% excise duty ~Pantami

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The minister of communications and digital economy, Isa Pantami, said on Tuesday that 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 organized by the presidential review committee on excise duty in Abuja.

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

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.

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

The Minister also informed the gathering that 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 telecom sector from the list of sectors to pay the excise duty as stated in Finance Act of 2021 and other subsidiary legislations, all of which are not as superior as the Constitution which permits the President to grant such waiver.

Pantami 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 telecom 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 per cent excise duty.”

The Minister assured Nigerians, who are telecom consumers, that the presidential exemption given to the telecom sector shall be sustained by the incoming administration as “the decision by the President is not about any political party or any administration but about Nigeria and welfare of Nigerian citizens.”

The Minister further 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.

“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.

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“This is the only sector where the prices of services have been reduced.” There is no justification for the government to impose more burdens on its poor citizens.

“Many micro, small, and medium enterprises (MSMEs) and small to 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 of the 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.

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.

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

The minister of finance and budget, Zainab Ahmed said in July last year that 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.

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