President Buhari Suspends 5% Tax Levy On Telecom Sector

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The Minister of Communications and Digital Economy, Prof. Isa Ali Pantami has disclosed that President Muhammadu Buhari has approved an exemption of 5% of excise duty for the telecommunication sector previously added by the Federal Government.

Prof Isa Pantami disclosed to newsmen on Tuesday in Abuja, that the decision to exempt the telecom sector from paying the 5% tax was made by the Presidential Committee set up last year to review the introduction of the Excise Duty by the Federal Ministry of Finance.

The tax was introduced based on the report on 41 multiple taxes and levies which the telecoms service providers in the industry paid. The Ministry of Finance had earlier introduced the 5% Excise Duty for the telecoms sector last year but was refuted by the Minister of Communication and Digital Economy, who claimed that the tax would be too tough on the service providers in the telecom sector, considering the multiple taxies and levies which have been imposed on the sector. He also argued that other critical stakeholders were not consulted before the decision was made.

The Minister said “We converge today with regard to the assignment given to us by the President. Historically, we had invited the media on 5th September 2022 and briefed them after inaugurating the Presidential Committee on the review of Excise Duty in the telecom sector.

‘‘Prior to that, there was an issue of 5% Excise Duty introduced to the sector without following due process, which was part of the requirements for subsidiary legislation. I was not contacted and when it was announced, I personally challenged it and wrote a letter to the President on 12th of August, 2022, demanding that the 5% duty be put on hold and also to set up a review committee to look into the issue critically and professionally and advise the President on the best way to handle it. He gracefully approved the two prayers and directed me to chair the committee, among whom was the minister of finance, NCC EVC, and representatives of the telecom service providers.

‘‘After the inauguration of the committee, the committee convened a stakeholders forum on 5th September and the committee was directed to incorporate other people that will add value to the work and it did. On 14th December 2022, another issue concerning the 5% excise duty came up which I spoke against and justified my stands in writing. I insisted that within the telecoms sector, there are 41 categories of charges and levies and so, there is no justification to add more burdens on a sector that is already doing well, contributing so much to the economy.

The Presidential Committee which completed its report in the first week of February 2023, invited other stakeholders before submitting its report. However, after the review, the committee reported that there was no need for Excise Duty in the ICT sector, the reason being that the sector is already paying 41 categories of charges and levies and has been contributing significantly to the economy already, to which it cited two countries in Africa that increased their excise duty in the ICT sector and that led to a collapse of the sector in that country.

He also added that ‘‘Thirdly, the committee argued that the sector has set an unprecedented record in terms of contribution to GDP. In Q1 2021, ICT sector alone contributed 14% to GDP, in Q2 2021 the sector contributed 17,9%, in Q2 2022 sector contributed 18.44% and in 2020, 2021 and 2022, the sector was rated the fastest growing sector without any subsidy, while other sectors even with subsidies were not doing well.

‘‘In furtherance of the justification of the position, the President had in 2022 directed Office of the Secretary to the Government of the Federation, SGF to invite two international firms to evaluate the whole ministries and agencies, which KPMG and Foreign Commonwealth and Development Office were among. At the end, the final report presented in October, 2022, out of 8 areas of evaluation, the ICT sector increased revenue generation by 594% and government revenue increased from N41bn to quarterly to 408bn.

‘‘So, the position of the committee is that the ICT sector is already contributing more than enough to the economy and so, other sectors which have not been contributing should be encouraged to do the same.

‘‘We have also observed that all other sectors have been increasing their goods and services except the ICT sector. As of Oct. 2022, average price of GB was reduced from N1200 to N300. Is the only sector in the prices had been reduced by 80%. Only one company in the ICT sector use 32,000 generators and consume 1m liters of diesel every day. My argument is that the current economic situation in the country does not favour the increase of Excise Duty,’’

The Executive Vice Chairman of the Nigerian Communications Commission, Prof Umar Dambatta also commented that the decision made by the Presidential review committee on Excise Duty is a good step towards sustainable growth in the country’s telecom sector.

To this, he applauded the Minister and President for the initiative, while advising telecom consumers who have complaints about the services provided by network providers to make their complaints to the NCC.