Nigerian government suspends 5% tax on calls, data

The Federal Government, on September 5th, announced the suspension of the controversial 5% excise duty on telecommunication services recently announced by the Ministry of Finance. This announcement was made at the inaugural meeting of the Presidential Committee on Excise Duty for the Digital Economy Sector in Abuja.

The Minister of Communications and Digital Economy, Isa Pantami, who was present, told the committee that the telecom sector was already overtaxed on multiple fronts and didn’t need more. Pantami said he petitioned President Muhammadu Buhari over the long-term effects of the tax if allowed to stay and claimed he got his approval to suspend the tax.

The Minister of Communications and Digital Economy was also allowed to constitute a committee which will look at the tax critically and advise the president appropriately. The committee will be chaired by Isa Pantami. Other members include: the Minister of Finance, Zainab Ahmed, Executive Secretary of the Nigerian Communications Commission (NCC), Professor Umar Danbatta, the Executive Chairman of the Federal Inland Revenue Service, Muhammad Nami and representatives of the telecommunication industry.

The ministry of Finance and the Nigerian Customs Service had recently announced plans to start implementation of proposed 5% excise duties on telecommunication services and beverages in 2023. Pantami, however, kicked against the move, saying it would increase the cost of telecommunication services, impoverish Nigerians more and widen the gap in telecom access in the country.

Not only that! Telecom operators under the aegis of the Association of Licensed Telecom Operators in Nigeria, ALTON also refused to go by the Finance minister’s proposition on the proposed tax. ALTON members lamented that it will whittle the growth of telecom penetration and put unnecessary pressure on subscribers’ ability to use telecom services.

Announcing the suspension of the tax yesterday, Pantami said: “It is because of my intervention that the President granted my prayers.” According to him, “He not only granted immediate suspension of the excise duty in the digital economy sector, but also approved that a committee be constituted to look into the matter carefully and advise accordingly.”

“The president has appointed me to be his eyes and ears in the sector and it is my responsibility to ensure we are just and fair to the operators, government and most importantly our people that are the consumers,” the minister added.

Explaining how he got the ears of President Muhammed Buhari to suspend the tax, Pantami said he petitioned the Mr. President and reminded him that excise duty is usually fixed on luxury products.

He also revealed that he reminded the President that currently, the ICT sector is over burdened by so many categories of taxes numbering up to 41. Some of these taxes, according to him, are duplicated and collected by the federal, state and local governments.

Pantami also noted that the current economic situation doesn’t allow for continued burden on the poor citizens.

Receiving the news of the suspension, Chairman ALTON, Engr Gbenga Adebayo said it was a victory for Telecom users who would have borne the brunt of the tax. He said: “The news of the suspension is well received. It shows that the government is listening to the complaints of the people and is always ready to do everything to increase penetration.

If the tax remained, the burden will be passed on to the subscribers and that would have put untold hardship on them. It is actually a victory for them.

I want the government to listen more and take decisions that will improve our quest to be a digital economy. More of these types of decisions will show Nigeria is ready to use ICT to build the economy” he added.