FG moves to implement 5% excise duty on telecom services

The federal government says it will start implementing a five percent inclusive excise duty on telecommunications services in Nigeria.

The development is coming months after President Muhammadu Buhari approved excise duty on telephone recharge cards and vouchers.

Zainab Ahmed, minister of finance, budget and national planning, disclosed this on Thursday at a stakeholders’ forum in Abuja.

The event was organised by the Nigerian Communications Commission (NCC).

Ahmed, represented by Frank Oshanipin, assistant chief officer of the ministry, said the duty had been in the 2020 Finance Act but delayed to allow room for stakeholders’ engagement.

“Payments are to be made monthly, on or before the 21st of every month,” she said.

“The duty rate was not captured in the Act because it is the responsibility of the president to fix the rate on excise duties, and he has fixed five percent for telecommunication services, which include GSM.

“It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue.

“The responsibility of generating revenue to run the government lies with us all.”

On his part, Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), said the burden would be on telecommunications consumers.

“It means that subscribers will now pay 12.5 percent tax on telecom services, we will not be able to subsidise the five per cent excise duty on telecom services,” he said.

“This is as a result of the 39 multiple taxes we are already paying coupled with the epileptic power situation as we spend so much on diesel.

Also, Ikechukwu Nnamani, president, Association of Telecommunications Companies of Nigeria (ATCON), said the five percent excise duty on telecom services did not conform with present realities.

Nnamani, represented by Ajibola Alude, executive secretary, ATCON, said the duty could lead to job losses.

“It is not well intended because the industry is not doing well currently,” he said.

On his part, Gbolahan Awonuga, executive secretary, ALTON, said the five percent excise duty was not healthy for the industry.

“We pay two percent excise duty to NCC from our revenue, 7.5 per cent VAT and 39 other taxes,” he said.

“We are going to pass it to the subscribers because we cannot subsidise it.”

Umar Danbatta, executive vice-chairman, NCC, said the excise duty was part of the 2022 fiscal policy measures.

Danbatta said the industry had considered the earlier scheduled commencement date of June 1.

He said the NCC had engaged with the federal ministry of finance, the Nigerian customs service and consultants from the World Bank to get needed clarifications.

“We consider it imperative that these implementing agencies should also meet directly with telecom industry stakeholders to address areas of concern,” Danbatta said.

“As the regulator of the telecoms industry, we are responsible for ensuring that industry stakeholders understand their fiscal and other obligations, so that they can maintain full compliance with government policy.”

He added that the excise duty covered both prepaid and post-paid telecommunications services. 

In May, ALTON had proposed an upward review of 40 percent in voice calls, short message services (SMS) and data costs.