It was exciting to see Federal Government bow to popular demand and removed Excise Duty Tax as telecoms sub-sector currently pay no fewer than 41 different categories of taxes
By IT News Nigeria team:
IT News Nigeria:
To begin with, excise duties are indirect taxes on the sale or use of specific products such as this time telecoms services and the revenue from these excise duties goes entirely to the federation account. It may also involve duties imposed on certain goods considered harmful to public health or the environment.
Months after President Muhammadu Buhari approved excise duty on telephone recharge cards and vouchers, The Federal Government says it will start implementing a five percent inclusive excise duty on telecommunications services in Nigeria.
This will be in addition to the existing 7.5 per cent Value Added Tax (VAT) that Nigerians pay for goods and services
With this policy in place, every call made by telecom subscribers will attract a five per cent of the total cost of the voice call, which would be deducted from the subscriber’s account by the telecom operator, and remitted to the federal Government.
However, after months of intensive negotiations, Federal Government reverse its decisions to tax the sub-sector providing the dependable platform for digital economy.
Abuja said it based its decisions on the recommendations of the Committee it constituted to review the applicability of the Duty to the telecom sector, adding that the Body considered telecoms overburdened with taxation and sundry levies.
Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami, who is the Chairman of the Committee, specifically set up for the purpose of reviewing the proposed excise duty in the telecom sector, said the Committee had carried out its national assignment and accordingly submitted its report to the President, justifying why the sector should be exempted.
The Minister said the Committee’s submissions can be summed up in three arguments put forward to justify why additional burden in form of taxes or any level should not be imposed on the telecom sector to prevent a reversal of the important contribution the sector is making to the growth of the Nigerian economy.
“Our justifications are based on three premises: First, is the fact that operators in the telecoms sub-sector of the digital economy industry currently pay no fewer than 41 different categories of taxes, levies and charges; secondly, that telecoms has continued to be a major contributor to Nigerian economy in terms of Gross Domestic Product Contribution (GDP).
“The third ground for contesting the Excise Duty in telecom sector is the fact that, despite increase in the cost of all factors of production across sector, and naturally leading to increase in costs of products and services, telecom sector is the only sector where cost of service has been stable and in many cases continued to go down over the past years and therefore, adding more burden will destroy the sector,” the Minister said.
The Minister also informed the gathering that the President, having looked into the arguments put forward by the Committee and relying on the provision of the Section 5 of the Nigerian 1999 Constitution, as amended, has therefore, exempted telecom sector from the list of sectors to pay the excise duty as stated in 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.”