Nigeria Rethinks Plsnned 5% Excise Duty on Phone Services
By Sahabi Abdul
Nigeria’s Communications Ministry suspended planned implementation of a 5 percent excise on telecommunications services as it rethinks current tax burdens borne by the sector.
The proposal will now be subjected to review by a special committee jointly headed by Communications and Digital Economy Minister Ali Isa Pantami and Finance Minister Zainab Ahmed, according to a statement by the Nigerian Communications Commission. Other members are drawn from the Federal Inland Revenue Service and the mobile netwọk operators.
The statement cited Pantami as saying that the telecommunications sector is already overburdened with 41 different categories of taxes and levies by different tiers of government.
“Excessive taxation has been a central challenge of the Information and communications technology sector,” Pantami was quoted as saying in the statement. “Despite the spiralling inflation, and cost of production, particularly the energy factor, the network service providers have not increased prices of services,” he said, adding that he’s not aware of any other sector of the Nigerian economy that hasn’t increased prices.
Pantami had petitioned President Muhammadu Buhari’s cabinet to review the plan on the ground that it’s unfair to overburden an industry very central to the country’s economic growth with too many taxes.
The contributions of telecommunications to the gross domestic product has increased significantly in recent years, jumping from 14.7 percent in the last quarter of 2020 to 18.44 percent in the second quarter of this year.
At the same time, Buhari’s government, faced with sharply declined oil revenue, has been desperate to compensate for the revenue shortfall by increasing taxes.