Telecom Operators Reject Proposed 5% Excise Duty On Services

The effort by the federal government to impose 5 per cent excise duty on telecommunications services has been rejected by the telecom operators, who argued that the economic situation of Nigeria does not warrant such tax.

This was the major issue at the stakeholders’ forum on the implementation of excise duty on all telecommunications services, which was organised by the Nigerian Communications Commission (NCC) in Abuja yesterday.

The Ministry of Finance, Budget and National Planning and the Nigerian Customs Service defended the proposed imposition of the excise duty.

Minister of Finance, Budget and National Planning, Zainab Ahmed, who was represented by Musa Umar, Assistant Director Tax Policy, said the government took the right steps to generate revenue as it is done in other parts of the world even as he urged the telecom operators to comply with the policy.

Assistant chief administration officer from the Ministry of Finance, Budget and National Planning, Frank Oshanipin, said the excise duty has become necessary to generate revenue to fund the national budget in the face of dwindling oil revenue.
Delivering his opening address, the executive vice chairman of the NCC, who was represented by Adeleke Adeolu, commissioner for stakeholders’ engagement at the commission, said the policy came about by virtue of Section 37 of the Finance Act 2020.
He added that the Act mandated that telecom service providers “shall be charged with duties of excise at a rate specified under the duty schedule as the president by order fixed the excise duty at 5%.”
However, president of Association of Licensed Telecom Operators of Nigeria (ALTON) Gbenga Adebayo, described the excise duty as unusual, adding that it will increase the burden on the telecom operators as they already have 39 other taxes that have been imposed on them.
Adebayo, who spoke via the virtual platform, noted that his association may not absorb the tax on behalf of the subscribers, stressing that they will transfer the burden to the subscribers to pay as higher prices for services. He however, affirmed the commitment of his association to help the government in its drive to generate revenue.
Also speaking through virtual means, national president, National Association of Telecoms Subscribers (NATCOMS) Adeolu Ogubanjo, said that the sector is already heavily taxed with payment made on every recharge card coupled with the existing VAT that is now at 7.5%.
He noted that the new excise duty will cumulatively hike the tax to 12.5% including VAT, which will be a huge burden on Nigerians. He said “it is quite insensitive, highly unwelcome and unpalatable”.
He urged the government to reverse the decision in the interest of the people as the telecom industry is the last hope of the common man and should not be destroyed.
Executive secretary of the Association of Telecommunications Companies of Nigeria (ATCON) Ajibola Olude kicked against the proposed tax, saying that it does not comply with the principles of taxation which include fairness. He said the implementation of the excise duty will cause job losses.
He said, “The proposed excise duty on all telecommunications companies is badly intended by the Ministry of Finance, National Planning and Nigeria Customs. And the reasons are that the current state of Nigerian communication is so bad that currently only about 756 ISP were registered but only 10 is active because of the issues of forex exchange.”