Ministry clears air on exemption of telecommunications sector from FG’s 5% excise tax hike
Minister of Communications and Digital Economy has clarified that the Federal Government’s newly announced increase of 5 per cent on excise duty does not include the sector.
According to the ministry, President Muhammadu Buhari, had on March 21, this year, approved the exemption of the telecommunications sector from the excise duty in line with the recommendations of the Presidential Review Committee on Excise Duty in the Digital Economy Sector.
The tax hike has already drawn the condemnation of organised private sector operators who described the increase as inimical to economic growth, and intended to stifle the manufacturing sector in the country still recovering from persistent setbacks occasioned by poor policies of government, just as they insisted that the increase was ill-timed.
Responding to reports over the status of the digital economy sector in the tax hike’s implementation, the ministry, in a statement signed by Mrs Uwa Suleiman, the Senior Special Adviser on Media Minister of Communications & Digital Economy, Professor Isa Ali Pantami, said a six-member Committee of the Presidential Review Committee on Excise Duty in the Digital Economy Sector, formally inaugurated on September 5, 2022 had made recommendations which were approved by President Buhari, which, among others, proposed the exemption of the ministry from the then proposed tax hijke.
The six-member committee comprised members from the Minister of Communications and Digital Economy as Chairman, Honourable Minister of Finance, Budget and National Planning, Chairman Federal Inland Revenue Service (FIRS), Executive Chairman Nigerian Communications Commission (NCC) as Secretary and two representatives of the Mobile Network Operators (MNOs).
“The Committee’s mandate was to critically and objectively assess the potential effects on the economy, of an additional 5% Excise Duty tax charge on the Digital Economy Sector.
“After five months of intensive and objective deliberations, the Committee submitted its report to the President precisely on the 13th of February 2023. The report had recommended the exclusion of the proposed, and then suspended 5% excise duty tax on the Digital Economy Sector, citing incontrovertible facts including; the unprecedented contribution of the sector to the nation’s Gross Domestic Product (GDP), the sustained quantum leap in government revenue which currently stands at a staggering Five Hundred and Ninety four Billion Naira quarterly, its position as the baseline driver of innumerable businesses at the Micro, Medium and Small scale levels among others.
“The Committee further analyzed the existing forty one (41) taxes, levies and charges already imposed on the sector and concluded that instead of burdening the sector with more taxes, concessions should be considered, in order to sustain its unprecedented contributions to the growth of the Nigerian economy. Based on the strength of its findings, the Committee prayed that the President exempts the Digital Economy Sector from the proposed additional Excise Duty.
“The Honourable Minister of Communications and Digital Economy, Professor Isa Ali Ibrahim (Pantami) further emphasized that besides overburdening the sector, imposing additional taxes to the sector will bring hardship to the citizens of the country and appealed to the President’s compassion in his decision.
President Muhammadu Buhari GCFR on the On 13th March 2023, approved the following prayer:
“The Government exempts the Digital Economy Sector from excise duty charges in order to sustain and enhance use of Digital Economy services and to further benefit from their positive impacts on the economy,” Mrs Suleiman said.
The ministry further assured that the sector and the general public ‘that the President’s approval, supercedes all other declarations regarding the issue and we stand by it. Any contrary proclamation should be disregarded by the general public.’
It also recalled that Professor Isa Ali Ibrahim (Pantami) ‘has vehemently opposed the proposed 5% Excise Duty for Telecommunications Services, on the grounds that it is unjustifiable, as it will be burdensome for the citizens of the country.’
