The federal Government has exempted the telecom sector from the five percent excise duty approved in 2020 to be paid by all sectors of the economy after six months of intense deliberations with telecommunications stakeholders.
The Minister of Communications and Digital Economy, Prof. Isa Ali Pantami disclosed this on Tuesday while briefing newsmen in Abuja.
The new five per cent Excise Duty is part of the new Finance Act signed into law by the President in 2020.
It is meant to be collected by the Nigerian Customs Service, and President Buhari had given directive that it be enforced on all telecoms service providers in the country on all local and foreign goods and services.
Pantami said the decision to exempt the sector from paying such tax was reached by the Presidential Committee set up last year to review the introduction of the Excise Duty by the Federal Ministry of Finance, which relied its report on 41 multiple taxes and levies being paid by the telecoms service providers in the industry.
He said the government was convinced that including the sector in the Excise Duty will bog down the activities of the sector which was already grappling with over 41 taxes and levies already.
‘‘ We converge today with regards to the assignment given to us by the President. Historically, we had invited media on 5th September 2022 and briefed them after inaugurating the Presidential Committee on review of Excite Duty in telecom sector.
‘‘Prior to that, there was issue of 5% Excise Duty introduced to the sector without following due process, which was part of requirements for a subsidiary legislation. I was not contacted and when it was announced, I personally challenged it and wrote a letter to the President on 12th of August, 2022, demanding that the 5% duty be put on hold and also to set up a review committee to look into the issue critically and professionally and advise the President on best way to handle it. He gracefully approved the two prayers and directed me to chair the committee, among whom were the minister of finance, NCC EVC, representatives of the telecom service providers.
‘‘After inauguration of the committee, the committee conveyed a stakeholders forum on 5th September and the committee was directed to incorporate other people that will add value to the work and it did. On 14th December, 2022 another issue concerning the 5% excise duty came up in which I spoke against it and justified my stands in writing. I insisted that within the telecoms sector, there is 41 categories of charges and levies and so, there is no justification to add more burdens on a sector that is already doing well, contributing so much to the economy.
The Presidential Committee completed its work in first week of February, 2023 and invited other stakeholders before submitted its report. After a review, the committee argued there was no need for Excise Duty in the ICT sector, reason that the sector as at today has been paying 41 categories of charges and levies; that the sector has been contributing significantly to the economy, citing two countries in Africa that increased their excise Duties for their ICT sectors that led to the dearth of the sector in both economies.
‘‘Thirdly, the committee argued that the sector has set unprecedented record in terms of contribution to FDP. In Q1 2021, ICT sector alone contributed 14% to GDP, in Q2 2021 the sector contributed 17,9%, in Q2 2022 sector contributed 18.44% and in 2020, 2021 and 2022, the sector was rated the fastest growing sector without any subsidy, while other sectors even with subsidies were not doing well.
‘‘In furtherance of the justification of the position, the President had in 2022 directed Office of the Secretary to the Government of the Federation, SGF to invite two international firms to evaluate the whole ministries and agencies, which KPMG and Foreign Commonwealth and Development Office were among. At the end, the final report presented in October, 2022, out of 8 areas of evaluation, the ICT sector increased revenue generation by 594% and government revenue increased from N41bn to quarterly to 408bn
.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, GCFR, 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 per cent 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.
