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Excise Duty: Buhari Approves Exemption of Telecoms to Avoid Overburdening Sector

President Muhammadu Buhari has approved the exemption of the telecommunications sector from the payment of excise duty to avoid burdening the sector and its teeming consumers with more financial challenges.

This disclosure was made Tuesday by the Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami at a briefing with media practitioners in Abuja.

The removal of excise duty in respect of the sector came as a result of the Minister’s consistent,  categorical and well-articulated opposition to its implementation in the sector. His opposition first came into public knowledge when a decision was taken to implement the levy without involving him in the decision making process. He was quick to voice his disagreement to the President and articulated his grounds of objection which led to the suspension of the charge in September, 2022.

This led to the constitution of the Presidential Review Committee on Excise Duty in the Digital Economy Sectorchaired by the Minister. The committee after several deliberations concluded that it was inappropriate to subject the sector to Excise duty on three grounds:

“Our justifications are based on three premises: First, is the fact that operators in the telecoms sub-sector of the digital economy industry currently pay no fewer than 41 different categories of taxes, levies and charges” 

“Secondly, that telecoms has continued to be a major contributor to Nigerian economy in terms of Gross Domestic Product Contribution (GDP). 

“The third ground for contesting the Excise Duty in telecom sector is the fact that, despite increase in the cost of all factors of production across sector, and naturally leading to increase in costs of products and services, telecom sector is the only sector where cost of service has been stable and in many cases continued to go down over the past years and therefore, adding more burden will destroy the sector,” the Minister said.

It is in agreement with these arguments that the President approved the removal of excise duty from the sector.

“I am happy to report to you that President Muhammadu Buhari, GCFR, has approved the exemption of the digital economy sector from the five percent excise duty to be paid and this is because of the strength of the argument presented to him by the Committee that additional burden on telecom sector will increase the sufferings of Nigerians and that other sectors that are not making as much contribution to the economy should be challenged to do more and pay the 5 per cent excise duty”, Pantami said.  

Reeling out some statistics to support the claim of huge contributions to the economy by the sector, the Minister statedthat the Digital Economy Sector contributed 14.07 per cent to the GDP in the first quarter of 2020; 17.79 per cent in the second quarter of 2021; and 18.44 per cent in the second quarter of 2022.

Also, he said the sector has increased its quarterly revenue generation for government from N51 billion to over N480 billion, representing a growth of 594 per cent; while the average cost of data per gigabyte has also reduced from N1,200 in 2019 to N335 presently, despite the increase in the cost of operations..

Asked by journalists whether the exemption will be sustained by the incoming government considering that the Buhari administration has barely two month left in office, Pantamiexplained that he doesn’t see any reason why it will be discontinued since it has nothing to do with any political party or administration but is concerned with the welfare of Nigerians.

“The decision by the President is not about any political party or any administration but about Nigeria and welfare of Nigerian citizens.”

To buttress the point he added that the Buhari administration continued with most of the projects started by its predecessor despite being a different political party citing the railways as example and that in this case the baton was passing to a new administration sponsored by the same party so he strongly believes that it will be sustained. 

Reacting to a question about whether the decision does not infringe on the provisions of the Finance Act, Pantami explained that Section 5 of the Nigerian Constituion empowers the President to take such a decision especially where it has to do with subsidiary legislations.

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