Federal Govt Bows To Pressure, Suspends Proposed 5% Tax On Telecom Services

The federal government has announced an immediate suspension of the five per cent excise duty it planned to impose on telecommunications services in 2022 even as it set up a committee chaired by the Minister of Communications and Digital Economy, Isa Ali Pantami, to review the policy immediately.

Pantami, who inaugurated the Presidential Committee on Excise Duty for the Digital Economy Sector on behalf of President Muhammadu Buhari in Abuja yesterday, said the decision to suspend the policy was to protect the sector from over taxation.

The Ministry of Finance, Budget and National Planning and the Nigerian Customs Service had recently announced their readiness to start collecting excise duty on telecommunications service. This decision did not go down well with industry players even as they warned of severe consequences on the sector.

Pantami, who had personally rejected the policy and advised President Buhari, cited the dangers the policy posed on the digital economy and the increasing hardship on Nigerians.
He recalled that the suspension directed by Mr. President followed his petition as the chairman of the Presidential Council on Digital Economy and eGovernment, as the policy has the potential to impact very negatively on the digital economy sector, and particularly telecommunications, which is already overburdened with multiple taxes totalling about 41 categories.
He said some of these are multiple taxations because other tiers or levels of government were imposing the same levies that Mobile Network Operators had already paid to the federal government.
Pantami stressed that the Excise duty will impose an immense burden on Nigerians.
He said that the excise duties are usually imposed on luxury goods and not telecommunications services that are increasingly becoming essential services for the survival of the people.
According to him, the introduction of excise duty in the telecommunication and information and communications technology industry would jeopardise the successes already recorded within the industry.
Other members of the committee are the minister of finance, budget and national planning, Mrs. Zainab Ahmed; the executive secretary of the Nigerian Communications Commission (NCC), Professor Umar Danbatta; the executive chairman of the Federal Inland Revenue Service, Muhammad Nami and representatives of the telecommunication industries.
Pantami said the decision on the suspended policy will be made after the committee completes its report.
The ninister recalled several positive developments in the sector that need to be sustained through support of the government.