FG suspends proposed 5% excise duty on telecom services

The Federal Government has postponed implementing the 5% excise duty on telecommunications services that it had previously announced. Isa Pantami, the minister of communications and digital economy, made the announcement on Monday in Abuja at the start of the first meeting of the Presidential Committee on Excise Duty on the Digital Economy Sector.

The Minister who had earlier rejected the proposed tax noted that the telecommunications sector is already overburdened by excessive and multiple taxations.

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. However, Pantami faulted the timing and process of imposing the tax on the industry, arguing that part of the responsibility of responsive government is not to increase the problems of the citizens.

Speaking at a recent forum in Lagos, Pantami said: “I have not been contacted officially. If we are, we surely will state our case. The sector that contributes to the economy should be encouraged. You introduce excise duty to discourage luxury goods like alcohol. Broadband is a necessity!”

“If u look at it carefully the sector contributes 2% excise duty, 7.5% VAT to the economy and you want to add, more,” he added.

Pantami faulted the lawmaking process that produced the “harsh” tax because it didn’t involve the Chairman of the House Committee on Communications, adding “so we reject it.”

The minister said the ministry would take further steps apart from the public rejection of the 5% tax.

“We will explore other means to reverse it! As a minister, based on the Provision of the Constitution of Nigeria, Section 148, we are exercising the powers of Mr. President. That is what the constitution says. At least, I am a major stakeholder, when VAT was increased to 7.5%, I was not consulted. I only heard the announcement and I think there is something questionable. I am glad that we are on the same page with our National Assembly members that are here. They have not been consulted and they are part of the committees. So, maybe beyond making our position known, we would go behind the scene and go against any policy that will destroy the digital economy sector. This is a sector, which we cherish and will go to any lengths to legitimately and legally to defend its interest,” Pantami stressed.

With the announcement of the suspension of the tax coming from the Communications Minister, it is unclear yet if the decision has the buy-in of the Budget Office and the Minister of Finance, who announced the commencement of the tax implementation from next year.