The Federal Government of Nigeria has clarified its position on the 5 per cent duty exemption for the digital economy.
The clarification was issued by the Ministry of Communications and Digital Economy in response to a document circulating online titled “Approval for the Implementation of the 2023 Fiscal Policy Measures and Tariff Amendments,” allegedly from a government institution.
According to the ministry, the exemption aligned with the recommendations of the Presidential Review Committee on Excise Duty in the Digital Economy Sector. The committee, chaired by the Minister of Communications and Digital Economy, Prof. Isa Pantami was constituted on September 5, 2022, with the mandate to assess the potential effects of an additional 5 per cent excise duty tax charge on the digital economy sector.
The committee’s report recommended the exclusion of the proposed 5 per cent excise duty tax on the sector, citing the sector’s unprecedented contribution to the nation’s gross domestic product (GDP) and its position as the baseline driver of countless businesses at the micro, medium, and small-scale levels.
After five months of intensive deliberations, the committee submitted its report to the President on February 13, 2023. The report recommended the exclusion of the proposed 5 per cent excise duty tax on the digital economy sector, citing the sector’s unprecedented contribution to Nigeria’s gross domestic product (GDP), sustained quantum leap in government revenue (N594billion quarterly) and its position as the baseline driver of innumerable businesses at the micro, medium, and small scale levels, among other reasons.
In addition, the committee analysed the existing forty-one taxes, levies and charges already imposed on the sector and concluded that instead of burdening the sector with more taxes, concessions should be considered to sustain its unprecedented contributions to the growth of the Nigerian economy. Based on the strength of its findings, the committee recommended that the President exempt the digital economy sector from the proposed additional excise duty.
Minister Pantami emphasised that imposing additional taxes on the sector would bring hardship to citizens and appealed to the President’s compassion in his decision. On March 13, 2023, President Muhammadu Buhari, GCFR, approved the committee’s prayer to exempt the digital economy sector from excise duty charges in order to sustain and enhance the use of digital economy services and to further benefit from their positive impacts on the economy.
The Ministry of Communications and Digital Economy assured the sector and the general public that the President’s approval supersedes all other declarations regarding the issue and any contrary proclamation should be disregarded. The exemption of the digital economy sector from excise duty charges is expected to encourage the growth of the sector and contribute to Nigeria’s economic development.
In conclusion, the Nigerian government’s decision to exempt the digital economy sector from excise duty charges is a step in the right direction, given the sector’s contribution to the country’s GDP and sustained quantum leap in government revenue. The government’s decision is expected to encourage more investments in the sector, create more jobs and promote economic growth. It is hoped that other African countries will emulate Nigeria’s example and provide a conducive environment for the growth of their digital economy sectors.
