By: Damian Okonkwo
The Nigerian Federal Government has exempted telecom services from the recently introduced 5% excise duty on all services. President Muhammadu Buhari approved the exemption in line with the recommendations of the Committee that reviewed the applicability of the duty to the telecom sector. The committee submitted its report to the President, justifying why the sector should be exempted.
One of the major justifications presented by the committee is that the telecoms sector is already overburdened with over 41 different taxes, levies, and charges. Additionally, the sector has continued to make a significant contribution to the Nigerian economy in terms of Gross Domestic Product Contribution (GDP).
The third reason for contesting the excise duty in the telecom sector is that despite the increase in the cost of all factors of production across the sectors, the telecom sector had remained the only sector where the cost of service has been stable and had continued going down over the past years.
Speaking on this last week, the Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami, Pantami revealed that the President, having examined the arguments presented by the Committee and anchoring on the provision of Section 5 of the Nigerian 1999 Constitution, as amended, has therefore, proceeded to exempt the telecom sector from the list of sectors to pay excise duty.
Remarkably, the implementation of the 5% excise duty in telecoms would have led to a 5% increase in the cost of all telecom services, including calls and data, as the service providers would have to pass the tax to their customers.
Therefore, the exemption is good news for Nigerians, as they would not have to pay extra for telecom services. It is also a welcome development for the telecom sector, which would have been adversely affected by the imposition of the excise duty.
Overall, the exemption would help to sustain the growth of the telecom sector and ensure that it continues to contribute to the Nigerian economy.