5 percent of the telecom sector’s tax levy is suspended by President Buhari

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Communications and Digital Economy Minister Prof. Isa Ali Pantami has revealed that President Muhammadu Buhari has approved a 5 percent excise duty exemption for the previously added telecommunications sector.

Prof. Isa Pantami revealed to journalists on Tuesday in Abuja that the Presidential Committee, which was established last year to assess the Federal Ministry of Finance’s adoption of the Excise Tax, decided to exempt the telecom sector from paying the 5 percent tax.

The tax was enacted in response to a report on the 41 different taxes and levies that the telecom service providers in the sector had to pay. The Minister of Communication and Digital Economy disputed the Ministry of Finance’s proposal to impose a 5 percent excise duty on the telecoms sector last year, arguing that it would be too onerous on service providers given the numerous taxes and levies already in place. Additionally, he contended that other significant stakeholders were not consulted before the choice was made.

The minister stated:.
“With regard to the task the President gave us, we have come together today. Historically, on September 5, 2022, we had invited the media and briefed them on the review of excise duty in the telecom sector after establishing the Presidential Committee.

Prior to that, there was a problem with a 5% excise duty introduced to the industry without following the proper procedures, which was a requirement for subsidiary legislation. I was not contacted, and after it was made public, I personally disputed it. On August 12, 2022, I wrote a letter to the president demanding that the 5 percent duty be suspended as well as the formation of a review committee to conduct a thorough and objective investigation of the situation and advise the president on the best course of action. He graciously accepted the two prayers and gave me the go-ahead to preside over the committee, which also included the minister of finance, the NCC EVC, and representatives from the telecom service providers.

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“After the committee was established, it held a stakeholders forum on September 5 and was instructed to include additional members who would enhance the work, which it did. On December 14, 2022, a new topic involving the 5% excise duty arose. I spoke against it and explained why in a written statement. I insisted that there is no justification for imposing additional burdens on a sector that is already doing well and making such a significant contribution to the economy given that there are already 41 categories of charges and levies within the telecoms sector.

Prior to submitting its report, the Presidential Committee, which finished its work in the first week of February 2023, invited additional stakeholders. After conducting a review, the committee concluded that the ICT sector did not require excise duty because it already paid 41 categories of charges and levies and had made a significant contribution to the economy. To support this conclusion, the committee cited two African nations where the ICT sector had experienced a collapse as a result of increased excise duty.

He also added that:-.
Thirdly, the committee claimed that the sector has achieved previously unheard-of levels of GDP contribution. In Q1 2021, the ICT sector alone contributed 14% to GDP; in Q2 2021, it contributed 17%; in Q2 2022, it contributed 18%; and in 2020, 2021, and 2022, it was rated as the fastest-growing industry without any subsidies, while other industries, even those with subsidies, performed poorly.

In order to support the position’s justification, the President instructed the Secretary to the Government of the Federation’s office in 2022 to invite two foreign companies to assess all of the ministries and agencies, among them KPMG and the Foreign Commonwealth and Development Office. Out of the eight evaluation areas, the ICT sector’s revenue generation increased by 594 percent and government revenue increased from N41 billion to N408 billion per quarter in the final report, which was presented in October 2022.

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The committee’s position is that the ICT sector is already making more than enough contributions to the economy, and that other sectors that have not been making contributions should be encouraged to start.

We have also noticed that, with the exception of the ICT sector, all other sectors have seen increases in their output of goods and services. as of October. By 2022, the average cost of a GB had dropped from N1200 to N300. This industry is the only one where prices have decreased by 80%. In the ICT industry, only one business uses 32,000 generators and uses 1 million liters of diesel per day. According to my justification, the country’s current economic climate does not favor raising excise duty.

The decision by the Presidential review committee on excise duty is a good step towards sustainable growth in the nation’s telecom sector, according to Prof. Umar Dambatta, executive vice chairman of the Nigerian Communications Commission.

In response, he commended the Minister and the President for the initiative and suggested that telecom users who were dissatisfied with the services rendered by network providers file a complaint with the NCC.

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