touchaheart Nigeria reports that the federal government has stated that it will not impose the proposed 5% excise levy on telecommunications services.
According to the government, this was done in accordance with the recommendations of the Presidential Review Committee on Excise Tax in the Digital Economy Sector, which was established to look into the administration of excise duty in the telecom industry.
At a news conference on Tuesday, Isa Pantami, the minister of communications and the digital economy, made this announcement.
The committee’s chairman, Pantami, stated,
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. This is due to the strength of the argument presented to him by the Committee that additional burden on the telecom sector will increase the suffering of Nigerians and that other sectors that are not making as much contribution to the economy should show.
He claims that many firms would have been impacted by the tax if it had been upheld. Many MSMEs and SMEs rely on the industry for survival, he claimed, and if the tax is raised, it will have a negative influence on these companies.
According to Pantami, the telecom industry already pays 41 different types of taxes, levies, and fees. According to him, since the telecom sector is already subject to up to 41 taxes, there is no need for excise duties. More taxes kill the industry, which has made significant contributions to Nigeria’s economy.
From N51 billion per quarter to N481 billion per quarter, we boosted revenue generated by 594 percent. The only industry where the cost of services has decreased is this one. There is no rationale for the government to burden its poor citizens with additional costs.
The next administration will maintain the tax exemption, he said.
To diversify its revenue streams, the Federal Government stated in July 2022 that it will impose a 5% excise duty tax on telecom services.
By the assistant chief officer of the ministry, Mr. Frank Oshanipin, the minister of finance, budget, and national planning, Zainab Ahmed, had made an announcement.
“The duty rate was not captured in the Act because it is the President’s job to determine rates on excise charges, and he has fixed 5% for telecommunication services, including GSM,” she stated. The fact that our earnings cannot cover our debts is well known, thus we must focus on sources of income other than oil.
Consumers will be responsible for paying the tax, telecom providers said at the time, raising the consumption tax on telecom services to 12.5%. The tax was subsequently put on hold while a committee was formed to study it.
The government may be considering implementing excise duty in 2023, according to a document titled “Invitation to a One Day Public Hearing and Submission of Memoranda on the 2022 Budget Bill” that surfaced during the process.
The National Association of Telecoms Customers, a group of telecom users, filed a lawsuit against the federal government in response to this.
Adeolu Ogunbanjo, the national president of NATCOMS, revealed in February that the organization has brought a lawsuit against the government at the Federal High Court in Ikoyi in protest of the industry’s numerous taxes and the rising costs for telecom users.
Tuesday’s suspension of the excise charge prompted Ogunbanjo to respond by insisting that the consumer group would continue its legal battle until the government provided a legal justification for its decision.
We cannot drop our lawsuit until the law is overturned or has legal standing. Even though he said that, the future administration might still bring it up, so they need to give it legal support.
The goal of the incoming administration will be to raise money. So, we will continue to be in court until it is changed or eliminated. One can always reintroduce it under the next administration. We have already filed a lawsuit and are pursuing it.
He continued by saying that although the group was appreciative of the gesture, it would keep fighting for its rights up until a legislation was passed that forbade any administration from reintroducing the tax.