The Federal Government has announced the removal of excise duty for telecom sub-sector of Nigeria’s Digital Economy Industry in line with the recommendations of the Committee it constituted to review the applicability of the Duty to the telecom sector which is considered already overburdened with taxation and sundry levies.
Minister of Communications and Digital Economy, Prof. Isa
Ali Ibrahim Pantami, disclosed this on Tuesday at a press briefing in Abuja.
The briefing was 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, following which President Muhammadu Buhari suspended
its application to the telecom sector and set up a Presidential Review
Committee on Excise Duty in the Digital Economy Sector.
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 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 five per cent excise duty.”
The Minister assured Nigerians, who are telecom consumers,
that the presidential exemption given to the telecom sector shall be sustained
by the incoming administration as “the decision by the President is not about
any political party or any administration but about Nigeria and welfare of
Nigerian citizens.”
The Minister further noted that the Digital Economy Sector
has continued to contribute significantly to the growth of the Nigerian
economy, having 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 the government from N51 billion to over N480 billion. The
increase represents a growth of 594 per cent; while the cost of buying data has
also reduced from N1,200 in 2019 to N350 presently, despite the increase in the
cost of operations, including 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.
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