The Federal Government has announced the removal of excise duty for telecommunication services, in line with the recommendations of the committee it constituted to review the applicability of the duty to the sector, considered already overburdened with taxation and sundry levies.
The Minister of Communications and Digital Economy, Prof. Isa Pantami, disclosed this on Tuesday (today) at a press briefing organised to provide updates on the status of the 5 per cent excise duty, whose applicability to the telecom sector was objected to by the minister in August 2022, resulting in the suspension of its application by President Muhammadu Buhari.
A presidential review committee on excise duty was then set up to look into its feasible application.
Pantami, who is the chairman of the committee, said it had carried out its national assignment and submitted its report to the president, justifying why the sector should be exempted.
The minister said the committee’s submissions were summed up in three arguments.
“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, telecoms has continued to be a major contributor to Nigeria’s economy in terms of gross domestic product contribution (GDP).
“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 the sector and naturally leading to increase in costs of products and services, the telecom sector is the only one where [the] cost of service has been stable. In many cases over the last few years, this has continued to drop. Adding more burden will destroy the sector,” the minister reasoned.
Also, the minister informed the gathering that, 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, the president ordered the exemption of the telecom sector from the list of sectors to pay the excise duty as stated in the 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.
“I am happy to report to you,” Pantami said “that President Muhammadu Buhari, GCFR, has approved the exemption of the digital economy sector from the 5 per cent excise duty to be paid. This is because of the strength of the argument presented to him by the committee that additional burden on [the] telecom sector will increase the sufferings of Nigerians. Other sectors not making as much contribution to the economy should be challenged to do more and pay the 5 per cent excise duty.
“The decision by the president is not about any political party or any administration but about Nigeria and [the] welfare of Nigerian citizens.”
A statement by the NCC’s director of public affairs, Reuben Muoka said the minister further noted that the digital economy contributed 14.07 per cent to the GDP in the first quarter of 2020; 17.79 per cent in the second quarter of 2021 and 18.44 per cent in the second quarter of 2022.
The sector has also increased its quarterly revenue generation for government from N51 billion to over N480 billion, representing a growth of 594 per cent; while the cost of buying data has also reduced from N1,200 in 2019 to N350 presently, despite the increase in the cost of operations, including the energy challenge that has caused mobile network operators to power base stations with over 32,000 power generating to provide seamless services to their teeming consumers.