The Federal Government has announced the removal of excise duty for telecom sub-sector of Nigeria’s Digital Economy Industry in line with the recommendations of the Committee it constituted to review the applicability of the Duty to the telecom sector which is considered already overburdened with taxation and sundry levies.
Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami, disclosed this on Tuesday at a press briefing organised to provide updates on the status of the 5% excise duty, whose applicability to the telecom sector was objected to by the Minister in August 2022, following which President Muhammadu Buhari suspended its application to the sector and subsequently set up a Presidential Review Committee on Excise Duty in the Digital Economy Sector.
Pantami, who is the Chairman of the Committee, specifically set up for the purpose of reviewing the proposed excise duty in the telecom sector, said 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.
Highlighting reasons behind the decision, the Minister explained: “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 has continued to be a major contributor to Nigerian economy in terms of Gross Domestic Product Contribution (GDP).
“The third ground for contesting the Excise Duty in telecom sector is the fact that, despite increase in the cost of all factors of production across sector, and naturally leading to increase in costs of products and services, telecom sector is the only sector where 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”.
The Minister also informed the gathering that the President, having looked into the arguments put forward by the Committee, and relying on the provision of Section 5 of the Nigeria’s 1999 Constitution, as amended, has therefore, exempted telecom sector from the list of sectors to pay the excise duty as stated in Finance Act of 2021 and other subsidiary legislations, all of which are not as superior as the Constitution which permits the President to grant such waiver.
Pantami said: “I am happy to report to you that President Muhammadu Buhari, has approved the exemption of the digital economy sector from the five percent excise duty to be paid and this is because of the strength of the argument presented to him by the Committee that additional burden on telecom sector will increase the sufferings of Nigerians and that other sectors that are not making as much contribution to the economy should be challenged to do more and pay the 5% excise duty.”
The Minister assured Nigerians, who are telecom consumers, that the presidential 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.”
He further noted that the Digital Economy Sector has continued to contribute significantly to the growth of the Nigerian economy, having contributed 14.07% to the GDP in the first quarter of 2020; 17.79% in the second quarter of 2021; and 18.44% in the second quarter of 2022.
Pantami said the sector has also increased its quarterly revenue generation for government from N51 billion to over N480 billion, representing a growth of 594%; 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.