FG removes planned 5% duty on telecom operators equipment

The outgoing Nigerian government said it has suspended the plan to impose a 5 percent excise duty on telecom equipment.

Isa Ali Pantami, Minister of Communications and Digital Economy said this was part of the telecom government’s resolve to review the number of taxes operators in the telecom industry are facing.

The government had set up the Presidential Review Committee on Excise Duty in the digital economy sector after operators and Pantami objected to the applicability of the excise duty. The committee chaired by Pantami recommended the removal of the excise duty to ease the burden of multiple taxation on the industry.

According to Pantami, the Committee had carried out its national assignment and accordingly submitted its report to the President, justifying why the sector should be exempted.

The Minister said the Committee’s submissions can be summed up in three arguments put forward to justify why additional burden in form of taxes or any level should not be imposed on the telecom sector to prevent a reversal of the important contribution the sector is making to the growth of the Nigerian economy.

“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, that telecoms have continued to be a major contributor to the Nigerian economy in terms of Gross Domestic Product Contribution (GDP),” Pantami said.

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The third ground for contesting the excise duty is the fact that despite the increase in the cost of all factors of production across the sector, which contributed to the increase in the costs of products and services, telecommunication is the only sector where the cost of service has been stable and in many cases continued to go down over the past years and therefore, adding more burden will destroy the sector.

Pantami said it was based on these grounds that President Muhammadu Buhari agreed to exempt the telecom sector from the list of sectors to pay the excise duty as stated in the Finance Act of 2021 and other subsidiary legislation. The minister said the exemption given to the telecom sector shall be sustained by the incoming administration as “the decision by the President is not about any political party or any administration but about Nigeria and welfare of Nigerian citizens.

The Minister further noted that the Digital Economy Sector has continued to contribute significantly to the growth of the Nigerian economy, having contributed 14.07 percent to the GDP in the first quarter of 2020; 17.79 percent in the second quarter of 2021; and 18.44 percent in the second quarter of 2022.

He said the sector has also increased its quarterly revenue generation for the government from N51 billion to over N480 billion, representing a growth of 594 percent; 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.