Nigerian govt exempts digital economy from 5% excise duty

The Nigerian government on Tuesday announced the exemption of Nigeria’s digital economy from the proposed 5 percent excise duty in August 2022.

The Minister of Communications and Digital Economy, Isa Pantami, said that this is in line with the recommendations of the committee formed to review the application of duties in the telecommunications sector which is considered to be overloaded with various taxes and levies.

According to a statement released on Tuesday, Mr. Pantami disclosed this at a press conference organized by the presidential review committee on excise duties in Abuja.

The statement noted that the briefing was held to provide an update on the status of the 5 percent customs duty.

In August 2022, the federal government announced that it would begin implementing a proposed excise tax on telecommunications and beverage services in 2023.

Minister of Finance, Budget, and National Planning, Ahmad Zainab, announced that the government is preparing to implement a 5 percent excise tax on telecommunications services, which will raise the total tax on telephone services to 12.5 percent. The sector has 7.5 percent in its services.

However, Mr. Pantami against new tax, which will increase the cost of telecommunication services in the country.

He said the ministry was not consulted and criticized the timing of the plan.

In September last year, the federal government suspended the proposed new tax on telephone and other telecommunication services.

Mr. Pantami, who is the chairman of the committee, specifically created a committee to review the proposed customs duty in the telecommunications sector.

Resolution

On Tuesday, the minister said that the committee had done its national duty and submitted a report to the president, justifying why the sector should be exempted.

He explained that the committee’s submission can be summarized in three arguments presented to justify why additional burdens in the form of taxes or levies of any kind should not be imposed on the telecommunications sector to prevent the reversal of the important contribution made by the sector to growth. of the Nigerian economy.

“Our justification is based on three grounds: First, is the fact that operators in the telecommunications subsector of the digital economy industry currently pay no less than 41 different categories of taxes, levies and fees; secondly, that telecommunications continues to be a major contributor to the Nigerian economy in terms of Contribution to Gross Domestic Product (GDP).

“The third reason for opposing customs duties in the telecommunications sector is the fact that, despite the increase in the cost of all factors of production in the sector and naturally increasing the cost of products and services, the telecommunications sector is the only sector where the cost of services has stabilized and in many -the number of cases has continued to decrease in recent years and therefore, adding another burden will damage the sector,” said Mr. Pantami.

He said the president, after looking at the arguments presented by the committee and relying on the provisions of section 5 of the Nigerian Constitution 1999, as amended, therefore exempted the telecommunications sector from the list of sectors to pay customs duties as stated in the Finance Act 2021 and other supplementary laws , all are not superior to the constitution that allows the president to grant such exemptions.

“I am happy to report that President Muhammadu Buhari, GCFR, has approved the exemption of the digital economy sector from the five (5) percent excise duty payable and this is due to the strength of the argument presented to him by the committee that the additional burden on the telecommunications sector will increase the suffering of Nigerians and other sectors that do not make much contribution to the economy should be challenged to do more and pay 5 percent excise duty,” he said.

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However, he assured Nigerians, who are telecommunications consumers, that the presidential exemption granted to the telecommunications sector will be implemented by the incoming administration because “the decision of the President is not about any political party or administration, but about Nigeria and the welfare of the people. Nigerians, “.

He also noted that the digital economy sector continues to add value to the Nigerian economy, contributing 14.07 percent to GDP in the first quarter of 2020, 17.79 percent in the second quarter of 2021 and 18.44 percent in the second quarter. from 2022.

He said the sector also increased its monthly revenue to the government from N51 billion to over N480 billion, representing a growth of 594 percent.

He added that the cost of purchasing data has also been reduced from N1,200 in 2019 to N350 today, despite the increase in operating costs, including energy challenges that have forced mobile network operators to power base stations with over 32,000 generating power. providing seamless service to a large number of consumers.