Isa Ali Ibrahim Pantami, minister of communications and digital economy, has announced that the Nigerian federal government has exempted the telecommunications sector from paying a 5% excise duty, which it had planned to introduce on telecom services, following the recommendations of a committee set up to review its applicability.
According to Pantami, this decision is based on three main arguments presented by the committee: the over-taxation of the telecom sub-sector, whose players pay up to 41 different categories of taxes, fees and charges; the major and growing contribution of the sub-sector to the Nigerian economy; and the maintenance of tariffs, despite rising operating costs. He added that this decision will be maintained by the incoming administration.
The introduction of a 5% excise duty on telecom services is planned for the 2020 Finance Act, which the Nigerian government intended to implement in July 2022 as part of its attempts to raise revenue. The initiative was immediately met with opposition from telecom industry players, including the Minister of Communications and Digital Economy.
Faced with mounting pressure, the government suspended the initiative in September 2022, but the idea was not abandoned. It was included in the provisions of the 2022 Finance Bill, revised by the National Assembly to support the 2023 Budget. In addition, the National Association of Telecom Subscribers (NATCOMS) has filed a lawsuit against the government over the matter.
The exemption from paying the 5% excise duty for the telecommunications subsector is expected to support the continued growth of information and communication technology (ICT) and the digital economy. For Q3 2022, the ICT sector contributed 15.35% to Nigeria's gross domestic product (GDP) and paid 286.6 million in taxes, according to the National Bureau of Statistics (NBS).