Home News <strong>President Buhari Suspends 5% Tax Levy On Telecom Sector</strong>

President Buhari Suspends 5% Tax Levy On Telecom Sector

President Muhammadu Buhari has authorized a 5% excise duty exemption for the previously included telecommunications industry, according to the Minister of Communications and Digital Economy, Prof. Isa Ali Pantami.

Prof. Isa Pantami revealed to newsmen on Tuesday in Abuja that the Presidential Committee established last year to evaluate the adoption of the Excise Duty by the Federal Ministry of Finance made the decision to exempt the telecom industry from paying the 5% tax.

The tax was introduced based on the report on 41 multiple taxes and levies which the telecoms service providers in the industry paid. The Ministry of Finance had earlier introduced the 5% Excise Duty for the telecoms sector last year but was refuted by the Minister of Communication and Digital Economy, who claimed that the tax would be too tough on the service providers in the telecom sector, considering the multiple taxies and levies which have been imposed on the sector. He also argued that other critical stakeholders were not consulted before the decision was made.

“We converge today with regard to the assignment given to us by the President,” the minister stated. In the past, on September 5, 2022, we had invited the media and informed them on the review of excise duty in the telecom industry after establishing the Presidential Committee. Prior to that, there was a problem with a 5% excise duty that was imposed on the industry without going through the proper channels, which was one of the prerequisites for subsidiary legislation. I personally questioned it after not being contacted, and on August 12, 2022, I addressed a letter to the President requesting that the 5% obligation be suspended as well as the formation of a review committee to conduct an objective and professional investigation of the matter in order to advise the  President on the best course of action. The minister of finance, the NCC EVC, and officials from the telecom service providers were there when he graciously granted the two requests and gave me the task of presiding over the committee.

“After the committee was established, it had a stakeholders conference on September 5 and was instructed to include more 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 provided written support for my position. I emphasized that there is no basis for adding more burdens to a sector that is already performing well and contributes so much to the economy because there are already 41 categories of tariffs and levies within the telecoms sector.

Before 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 there was no need for excise duty in the information and communications technology (ICT) sector because it already paid 41 categories of charges and levies and had been making a significant contribution to the economy. To support this conclusion, the committee cited two African nations where increasing the excise duty in the ICT sector had resulted in the collapse of the sector.

He continued, “Thirdly, the committee asserted that the industry has achieved a hitherto unheard-of level of GDP contribution. ICT was the fastest-growing industry without any subsidies in 2020, 2021, and 2022, contributing 14% of GDP in Q1 2021, 17,9% of GDP in Q2 2021, and 18.44% of GDP in Q2 2022. Other industries, including those with subsidies, were struggling at the time.

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. In the end, the ICT sector increased revenue generation by 594%, and government revenue increased from N41 billion to quarterly to 408 billion, according to the final report delivered in October 2022.

We have also noticed that all other sectors have been increasing their goods and services except the ICT sector, so the committee’s position is that the ICT sector is already contributing more than enough to the economy and that other sectors which have not been contributing should be encouraged to do the same. The average cost of a GB has decreased from N1200 to N300 as of October 2022. Is the only industry where prices have decreased by 80%. Only one ICT company uses 32,000 generators and uses 1 million liters of diesel each day. My claim is that the nation’s current economic climate does not favor raising excise duty,”

The decision taken by the Presidential review committee on excise duty, according to Prof. Umar Dambatta, Executive Vice Chairman of the Nigerian Communications Commission, is a positive move towards the country’s telecom sector’s sustained growth.

He commended the Minister and President for the initiative in response to this and advised telecom users who were dissatisfied with the network providers’ services to file a complaint with the NCC.

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