Inspite of the protests by both the Minister of Communications and Digital Economy, Dr. Isa Pantami and stakeholders in the telecoms sector of the economy, the Federal Government said it has concluded plans to implement the new tariff hike of five per cent on calls and data.
The Minister of Finance, Budget and National Planning who disclosed this on Thursday said the Government would begin the implementation of a five per cent excise duty tax on all voice calls, SMS and data services, in addition to the existing 7.5 per cent Value Added Tax (VAT), paid for goods and services across all sectors of the economy.
She made the disclosure during a stakeholders’ meeting, organised by the Nigerian Communications Commission (NCC), and the telecoms industry regulator.
At that meeting, Mrs Zainab Ahmed, Minister of Finance, Budget and National Planning, who was represented by the Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, noted: “The five per cent excise duty has been in the Finance Act 2020, but has never been implemented.
“Henceforth, the five per cent 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.”
Yunusa Tanko Abdullahi, Special Adviser, Media & Communications to the Minister said in a press statement that “against the comments by Dr Isa Ali Pantami, Minister of Communication and Digital Economy, concerning the five per cent excise duty hike on telecoms services, it is worth noting that there was a circular stating the planned hike which was addressed to the communication minister and other relevant ministries and agencies of government.
“The circular Referenced No. F. 17417/VI/286 dated 1st March 2022, and titled “Approval for Implementation of the 2022 Fiscal Policy Measures and Tariff Amendments” was addressed to different Ministers, including the Minister, Communications and Digital Economy and other heads of government agencies.
“The circular was addressed to the Secretary to the Government of the Federation, Attorney-General of the Federation, Ministers of Industry, Trade and Investment; Agriculture and Rural Development, and; Mines and Steel and Development. Others are Ministers of Health, Aviation, Information And Culture, Budget And National Planning.
“Other heads of agencies copied in the circular are Accountant-General of the Federation, Comptroller-General of Customs, Governor of the Central Bank of Nigeria, Executive Chairman of the Federal Inland Revenue Service and the Director-General of the Raw Materials Research and Development Council.
“Others are the Executive Secretary of Nigerian Export Promotion Council (NEPC) and the Executive Secretary of the Nigerian Investment Promotion Commission”.
According to Yunusa, part of the circular reads: “This is to convey that his Excellency Mr President has approved Supplementary Protection Measures (SPM) for implementation of ECOWAS Common External Tariff (CET) 2022-2026 and excise duties on non-alcoholic beverage, cigarettes and Tobacco products as well as telecommunication services with effects from 1st April 2022″.
The circular signed by Mrs Ahmed reads: “A grace of ninety (90) days commencing from the date of implementation of this circular i.e April 1, 2022, shall be granted to all importers who had opened Form M and must have entered into irrevocable trade agreement before the coming into effect of this circular to process and clear these goods at the prevailing duty rates.
“However new import transactions entered from the 1st of April 2022 will be subjected to the new import duty regime,” she said.
Recall that the Finance Act, 2020 introduced ‘Telecommunication Services’ provided in Nigeria to be liable to excise duty under Section 21 (2) of the Customs and excise tariff etc. (Consolidation) Act, CAP. C49, LFN 2004.
It, therefore, means that all stakeholders have by that singular provision been aware of the Act.
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 to date.
This is considering the need to ensure a reasonable transition period before the implementation of the new tax, as well as providing clarity to all stakeholders on implementation modalities.
He noted that as a matter of emphasis, Mrs Ahmed had vide 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 Mr President’s approval of the implementation of the five percent excise duty on telecommunication services with effect from 1st June, 2022.
The circular provided a 90-day moratorium with effect from 1st March, 2022 before the implementation of the excise tax and currently, the excise tax is yet to be implemented.
“An issue as serious as the excise tariff cannot be taken single-handedly, as all stakeholders and agencies have been involved including Manufacturers Association of Nigeria (MAN) and Association of Telecom Operators of Nigeria (ALTON), who wrote to the Ministry to be involved in the modalities for implementation of the excise duty.
“Also recall that recently, Dr Pantami rejected the planned implementation of five per cent excise duty in the Nigerian telecoms sector.
“He expressed his disapproval of the policy at a telecom forum in Lagos, 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 per cent 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”, Yunusa further stated.
“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 quoted Pantami as saying.
Continuing, Mrs Ahmed said “In view of the above position of Dr Pantami, there could be the question whether he was 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).
“Suffice this to say that before the Act, the Finance Bill would have been through the FEC of which Dr Pantami is a member and the National Assembly. In other words, he 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 noted that although Nigeria is celebrated as the largest economy in Africa, translating this wealth into revenues remains a challenge.
“Considering this in line with the provision of the revised National Tax Policy which provides the framework for a sustainable tax system that would ensure reliable sources of revenue to government and support economic development.
“Subsequently, in line with the Finance Act, the federal government introduced “Telecommunication Services” provided in Nigeria to be liable to excise duty under Section 21 (2) of the Customs and Excise Tariff etc. (Consolidation) Act, CAP. C49, LFN 2004.”
Mrs Ahmed said Nigeria is one of the largest telecommunication markets in Africa, and 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, she noted, continues to grow substantially, having increased from about 180 million subscribers in 2019 to over 200 million active subscriptions in 2020.
This, Mrs Ahmed reiterated represents an increase of over nearly 11 per cent in total subscriptions, explaining that 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.