Nigerian government suspends 5% excise duty on telecoms

The Federal Government of Nigeria has suspended the implementation of the proposed 5% excise duty charge on telecom services in the country.

According to the Minister of Communications and Digital Economy, Isa Pantami, Nigeria's President, Muhammadu Buhari has approved the suspension awaiting the findings of the Presidential Committee on Excise Duty for the Digital Economy Sector.

"It is my responsibility to ensure we are just and fair to the operators, government and most importantly the consumers. Recently, it was announced that excise duty will be introduced in the telecom sector, I rejected that wholeheartedly because excise duty was usually fixed on luxury products," he said.

A few weeks ago, Nigeria's Finance Minister, Zainab Ahmed disclosed that a 5% excise duty will be added to the already existing 7.5% Value Added Tax (VAT) on telecommunications services. According to Ahmed, Nigeria's revenue cannot run the country's financial obligations, hence the need to shift to non-oil revenue.

However, telecom operators have kicked against the implementation of the excise duty describing it as a "bad intention by the ministry of finance". Normally, excise duty is applicable on beer and stout, wines, spirits, cigarettes, and homogenised tobacco manufactured in or imported into Nigeria at 20%. With the Finance Act 2022, Nigeria has introduced excise duty on non-alcoholic beverages including telecommunication services.

"As of today, the information and communications technology (ICT) sector is overburdened by so many categories of taxes to the extent that there are 41 categories of taxes at the federal and state level, particularly in the telecom sector," Pantami said.

According to the recent Gross Domestic Product (GDP) report by the National Bureau of Statistics, the ICT sector contributed 18.44% to Nigeria’s GDP in the second quarter of 2022. The sector saw a 6.55% growth rate from Q1 2022.