The Federal Government has announced that telecom services will no longer be subject to the Finance Bill 2022’s 5% excise charge requirement.
Nairametrics reported that the government claimed that the exemption was in line with the suggestions of the committee it established to assess the Duty’s applicability to the telecom sector, which is thought to be already overtaxed and subject to several levies.
At a news conference held on Tuesday to provide updates on the situation, Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami, revealed this.
According to Pantami, the Chairman of the Committee which was specially established to study the proposed excise duty in the telecom sector, the Committee completed its mandate and, as a result, submitted its report to the President, arguing for the sector’s exemption.
The Minister stated that the Committee’s recommendations can be summed up in three arguments made to support the claim that the telecom industry should not be subjected to additional burdens, including taxes, to preserve the significant contribution the industry is currently making to the expansion of the Nigerian economy.
“Our arguments are supported by three presumptions: First, operators in the telecoms sub-sector of the digital economy business are currently required to pay no less than 41 various types of taxes, levies, and charges. Second, telecoms have remained a key contributor to the Nigerian economy in terms of Gross Domestic Product Contribution.
“The third ground for contesting the excise duty in the telecom sector is that it is the only industry where the cost of service has been stable and, in many cases, continued to decline over the past years, despite the increase in the cost of all factors of production across the sector, naturally leading to an increase in the costs of products and services,” the minister said.
The Minister also informed the group that the President, after considering the Committee’s arguments and relying on Section 5 of the Nigerian Constitution of 1999, as amended, had exempted the telecom sector from paying the excise duty as stated in the Finance Act of 2021 and other subsidiary legislations, all of which are inferior to the Constitution, which allows the President to grant such a waiver.
“I am pleased to inform you that President Muhammadu Buhari, GCFR, has authorized the exemption of the digital economy sector from the requirement to pay a 5% excise duty. This decision was made in light of the persuasiveness of the case made to him by the Committee that additional burden on the 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 percent excise duty,” he said.
Pantami had opposed the 5% excise duty’s applicability to the telecom industry in August of last year. This triggered the establishment of a Presidential Review Committee on Excise Tax in the Digital Economy Sector and the suspension of the excise duty’s application to telecom services by President Muhammadu Buhari.
Since service providers were required to pass the tax on to their consumers, the adoption of the 5% excise duty in telecoms would have resulted in a 5% rise in the price of all telecom services, including calls and data.
