The Federal Government has announced the removal of excise duty for telecom sub-sector of Nigeria’s digital economy Industry.
This was in line with the recommendations of the committee it constituted to review the applicability of the Excise Duty to the telecom sector which is considered already overburdened with taxation and sundry levies.
Minister of Communications and Digital Economy, Professor Isa Ali Ibrahim Pantami, disclosed this on today at a press briefing organised to provide updates on the status of the five per cent Excise Duty, whose applicability to the telecom sector was objected by the Minister in August, 2022.
President Muhammadu Buhari, following the objection by the minister, suspended its application to the telecom sector and set up a Presidential Review Committee on Excise Duty in the Digital Economy Sector.
Pantami was the chairman of the committee, specifically set up for the purpose of reviewing the proposed excise duty in the telecom sector.
He said the committee had carried out its national assignment and, accordingly, submitted its report to the president, justifying why the sector should be exempted.
Pantami 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.
He said the submissions were 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 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,” he said.
He informed that the president 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), 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.
He added that all of these are not as superior as the Constitution permits the President to grant such waiver.
Pantami said: “I am happy to report to you that President Muhammadu Buhari has approved the exemption of the digital economy sector from the five percent Excise Duty to be paid.
“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 five per cent Excise Duty.”
The minister assured Nigerian telecom consumers that the presidential exemption given to the telecom sector shall be sustained by the incoming administration.
“The decision by the president is not about any political party or any administration but about Nigeria and welfare of Nigerian citizens,” he added.
Pantami further noted that the digital economy sector has continued to contribute significantly to the growth of the Nigerian economy.
He said it has contributed 14.07 per cent to the GDP in the first quarter of 2020; 17.79 per cent in the second quarter of 2021; and 18.44 per cent in the second quarter of 2022.
He said the sector has also increased its quarterly revenue generation for government from N51 billion to over N480 billion, representing a growth of 594 per cent.
Pantami disclosed that the cost of buying data has also reduced from N1,200 in 2019 to N350 presently, despite the increase in the cost of operations.
This, he said, included the energy challenge that has caused mobile network operators to power base stations with over 32,000 power generating to provide seamless services to their teeming consumers.