The Federal Government has suspended the proposed excise duty on telecommunication services.
The suspension was announced by the Minister of Communications and Digital Economy, Prof Isa Pantami, on Monday during the inaugural meeting of the Presidential Committee on Excise Duty for the Digital Economy Sector in Abuja.
According to the minister, the Information, Technology and Communication sector, especially the telecom industry, is already overburdened by excessive and multiple taxations, which will likely adversely affect the sector, if the government fails to take any precaution. Pantami noted that the ICT sector has been the backbone of the Nigerian economy both in the area of its contribution to the Gross Domestic Product and taxes collected by the Federal Inland Revenue Service.
The minister said, “However, in spite of the contributions and achievements of the sector, we have been recording some challenges coming up from time to time that if care is not taken these challenges could be a barrier to the development of this sector in the next few years to come. One of them is the issue of excessive taxation and sometimes, multiple taxations in the sector.”
He further disclosed that the number of taxes from both federal and state levels paid by firms in the ICT sector rose from 39 in August to 41 in September 2022, within a period of about a month.
“The ICT sector is being overburdened with so many categories of tax,” Pantami stressed, adding, “If care is not taken, this is going to jeopardise the achievements and gains we have recorded so far in the sector.”
The Federal Government, through the Budget Office of the Federation, had earlier revealed that it would begin the implementation of its proposed excise duties on telecommunication services and beverages in 2023.
However, Pantami has maintained that he is against implementing this tax, which would increase the cost of telecommunication services for Nigerians. The minister noted that with the increase in operating costs due to inflation and rising diesel, among others, there were more than 15 attempts to increase the price of telecommunication services within three years, which he kicked against.
The minister also said that he rejected the excise duty on telecoms because such a tax is usually introduced on luxury products or services. He added that in most countries, it is usually introduced to reduce the consumption of certain things in the country, such as cigarettes. Pantami noted that by implication, it means the government is discouraging Nigerians from using telecommunication services, which have become a necessity for many Nigerians.
He said that introducing the tax would likely destroy the sector and further contribute to more hardship for Nigerians. The Federal Government, however, inaugurated a committee to review the possibility of introducing the excise duty in the digital economy sector and advise the presidency on the necessary steps to take.