The Federal Government has once again begun plans to implement the 5% excise duty on telecommunications services.
Nairametrics reported that this additional tax is part of the new Fiscal Policy Measures for 2023, which were announced on April 20, 2023, through a Circular signed by the Minister of Finance, Budget, and National Planning, Zainab Ahmed.
This announcement follows just one month after the Minister of Communications and Digital Economy, Prof. Isa Pantami, declared that the government had exempted telecommunication services from paying the 5% excise duty specified in the Finance Bill 2022.
The 2023 fiscal policy, as presented by the Minister of Finance, Budget, and National Planning, includes implementing a 5% excise tax on telecommunications services, among other fiscal measures to be enacted this year.
The Minister, in a Circular, titled ‘Approval for the Implementation of the Fiscal Policy Measures and Tariff Amendments’, confirmed the implementation of the excise tax on telecommunications services, which was previously introduced by the Finance Act 2020 and authorized by the President through the Official Gazette No. 88, Vol. 109 of May 11, 2022.
According to the report, “The tax is applicable on mobile telephone services (GSM), fixed telephone and internet services, both postpaid and prepaid at the rate of 5%.”
In addition, starting from June 1, 2023, the new policy will add more taxes on alcoholic drinks, tobacco, wines, and spirits. The additional excise taxes will be between 20% to 100%, higher than the rates approved in the 2022 FPM roadmap for 2022-2024. The new policy will also include ad valorem excise duties and specific rates, which are higher than before. The tax rate for non-alcoholic beverages will remain the same at N10 per litre.
The Fiscal Policy Partner and Africa Tax Leader at PwC, Mr Taiwo Oyedele, criticized the newly announced taxes in the circular, stating that they revealed policy inconsistency on the government’s part.
In his words, “The additional excise taxes represent increases over and above the previously approved rates per the 2022-2024 Roadmap approved via the 2022 FPM. It is policy inconsistency to approve tax rates for a period and then change the rules midway into the implementation without any compelling reasons or appropriate engagement with the affected industries especially at a time they have suffered significant sales decline due to the recent naira scarcity. What the industry needs from the government at this time is enabling policies, not an additional tax burden.”
