Finance Minister insists on 5% Telecom Tax
TECHDIGEST – Minister of Finance, Budget and National Planning, Zainab Ahmed has drawn a battle line with her Communication and Digital Economy counterpart, Professor Isa Ali Pantami over the planned collection of the increased tariff of five per cent on internet data and phone calls.
Against Pantami’s threats to stop implementation of the increased tariff on telecommunication consumers, saying it will scuttle the growth in the sector, the finance minister said government is going ahead to implement the new tariff hike no matter the opposition. She said the five per cent hike has been in the Finance Act 2020, but was never been implemented.
The finance minister made the remarks during a stakeholders’ meeting that was organised by the Nigerian Communications Commission (NCC). She was represented by the assistant director, tax policy in her ministry, Musa Umar. “Henceforth, the five percent excise duty will be collected by telecom operators and payment made to the federal government on a monthly basis, on or before 21st of every month,” the minister said yesterday.
Pantami had rejected the planned implementation of five percent excise duty in the Nigerian telecoms sector. He expressed his disapproval for the policy at a telecom forum in Lagos that was organised by the Nigeria Office for Developing the Indigenous Telecoms Sector (NODITS), an agency domiciled in the Nigeria Communications Commission (NCC).
He said that he would explore every legitimate means to stop the planned five percent excise duty tax on telecom consumers, faulting the timing and process of imposing the tax on the telecom industry, insisting that part of the responsibility of a responsive government was not to increase the challenges citizens were facing.
“I have not been contacted officially. If we are, we surely will state our case. The sector that contributes to the economy should be encouraged. You introduce excise duty to discourage luxury goods like alcohol, but broadband in the telecom sector is a necessity,” he told the gathering in Lagos.
But the finance minister said Pantami cannot claim to be absented in the whole processes that resulted in the Finance Act, which is a product of both the National Assembly and Federal Executive Council (FEC).
Ahmed said Pantami was involved in the making of the Finance Act which spells the said excise tariff hike policy. Therefore, “he could not obviously have had a point in his ‘dissenting views’ even as the National Assembly could not have contradicted itself on this matter, because the parliament had passed the Finance Bill before President Muhammadu Buhari signed it into law,” she said.
Mrs Ahmed said the federal government introduced “Telecommunication Services” in line with the Finance Act.
Nigeria is one of the largest telecommunication markets in Africa. Available report from the NCC shows four categories of operators, i.e., mobile (GSM), fixed telephony operators (fixed/fixed wireless), internet service providers (ISPS) and others (operators other than mobile & fixed telephony, ISPs).
Subscriber number continues to grow substantially, having increased from about 180 million subscribers in 2019 to over 200 million active subscriptions in 2020. This represents an increase of over nearly 11 percent in total subscriptions. Moreover, many countries in sub-Saharan Africa such as Tanzania, Uganda, Malawi, Kenya, Rwanda, Ghana and Burundi currently impose excise duty on telecommunication services ranging between five per cent to 20 per cent.
The excise duty on telecommunication services provided in Nigeria introduced through the Finance Act, 2020 with statutory enactment on 1st January, 2021 is yet to be implemented till date.
The government said the delay was to consider the need to ensure reasonable transition period before the implementation of the new tax, as well as providing clarity to all stakeholders on implementation modalities.
The finance minister claimed that she had through a circular dated 1st March, 2022 informed the Nigeria Customs Service (NCS) and other heads of government ministries, departments and agencies (MDAs), including the Federal Ministry of Communication & Digital Economy about Buhari’s approval of the implementation of the five percent excise duty on telecommunication services with effect from 1st June, 2022.