Nigeria Government Removes 5% Excise Duty from Telecom Sector

The Federal Government of Nigeria has finally exempted the telecom sub-sector from the 5% Excise Duty that was previously imposed on it. The decision was made after a committee was constituted by the government to review the applicability of the duty to the sector. The Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami, disclosed this during a press briefing held in Abuja on Tuesday.

According to the Minister, the issue of the 5% Excise Duty was brought to his attention in August 2022, and he challenged it by writing a letter to President Muhammadu Buhari, demanding that the duty be put on hold and a review committee be set up to look into the matter critically and professionally. The President approved the Minister's request and directed him to chair the committee.

The committee, which included the Minister of Finance, the Executive Vice Chairman of NCC, and representatives of the telecom service providers, among others, completed its work in the first week of February 2023. It held a stakeholders forum on 5th September 2022, and after incorporating other people that would add value to the work, it submitted its report for review.

The committee argued that there was no need for Excise Duty in the ICT sector, which was already paying 41 categories of charges and levies. It also stated that the sector had been contributing significantly to the economy and cited two African countries that had increased their excise duties on their ICT sectors, which led to the death of the sector in both economies.

The committee further stated that:

 “The telecom sector in Nigeria had set an unprecedented record in terms of contribution to GDP. In Q1 2021, the sector alone contributed 14% to GDP, in Q2 2021 it contributed 17.9%, and in Q2 2022, it contributed 18.44%. In 2020, 2021, and 2022, the sector was rated the fastest growing sector without any subsidy, while other sectors even with subsidies were not doing well”.

How Will This Exemption Help?

The decision to exempt the telecom sub-sector from the 5% Excise Duty has been welcomed by stakeholders in the industry. They believe that the move will help to sustain the growth of the sector, which has been a major contributor to the Nigerian economy. The exemption will also reduce the burden of multiple taxation on telecom service providers and enable them to invest more in infrastructure development, network expansion, and the provision of quality services to consumers.

Overall, the Federal Government's decision to exempt the telecom sub-sector from the 5% Excise Duty is a welcome development. It is a testament to the government's commitment to promoting the growth of the digital economy and creating an enabling environment for businesses to thrive in Nigeria. The move will help to sustain the growth of the sector, reduce the burden of multiple taxation, and enable telecom service providers to invest more in infrastructure development and the provision of quality services to consumers.