FG Set To Go Ahead With Five Per Cent Excise Duty For Telecoms

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Barring any unforeseen, the Federal Government is set to proceed with its implementation of a five per cent excise duty tax on mobile telephone services, fixed telephone, and Internet services. This is despite a recent communication by the Minister of Communications and Digital Economy, Isa Pantami, that the government has exempted the telecoms sector from excise duty tax.

It would be recalled that the Federal Government had in September last year suspended the proposed excise duty on telecommunication services for the first time.

The suspension was announced by Pantami during the inaugural meeting of the Presidential Committee on Excise Duty for the Digital Economy Sector.

According to the minister, the Information, Technology and Communication sector, especially the telecom industry, is already overburdened by excessive and multiple taxations, which will likely adversely affect the sector if the government fails to take any precautions.

He disclosed that the number of taxes from both federal and state levels paid by firms in the ICT sector rose from 39 in August to 41 in September 2022, within a period of about a month.
The Federal Government, through the Budget Office of the Federation, had earlier revealed that it would begin the implementation of its proposed excise duties on telecommunication services and beverages in 2023. The Minister had however kicked against the idea.
The Federal Government, however, inaugurated a committee to review the possibility of introducing the excise duty in the digital economy sector and advise the presidency on the necessary steps to take.

After months of uncertainty concerning the implementation of a new tax on calls, data, and other telecom services, Pantami, in March 2023, announced that the government was concerned about the sufferings of Nigerians and has exempted telecoms from excise duty.

However, the new Fiscal Policy Measures for 2023 via a Circular dated 20 April 2023, and signed by the Minister of Finance, Budget and National Planning, Zainab Ahmed revealed that the government was set to proceed with the implementation of the five per cent excise duty on telecom services.

According to Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader, PwC, “The circular was coded HMFBNP/MDAs/CIRCULAR/2023 FP/04 and titled ‘Approval for the Implementation of the 2023 Fiscal Policy Measures and Tariff Amendments.’ It stated that the president, Major General Muhammadu Buhari (retd), has approved the implementation of the 2023 Fiscal Policy Measures.”

He revealed that the tax is applicable on mobile telephone services, fixed telephone, and internet services, both postpaid and prepaid at the rate of five per cent.

Excise duty on telecom services has generated a lot of controversies since the minister of finance first announced its implementation in 2022 with telecom operators and consumers kicking against the tax. At the time, operators stated that the tax would be transferred to consumers (increasing consumption tax on telecom services to 12.5%) because of the multiple taxations that the sector was already besieged with.