Telecom tax: Stakeholders project rise in call cost

The cost of calls, data, and SMS may rise after the former president of Nigeria, Muhammadu Buhari, signed a five per cent excise duty on telecommunication services into law despite protests against the move.

As part of his last acts as president, Buhari signed the Finance Act 2023 into law on May 28, 2023. According to section 21 of the Principal Act amended by substituting for subsection (2), a new subsection (2), all services, including telecommunication services would be charged excise duty.

Part of the document leaked on LinkedIn by the Fiscal Policy Partner and Africa Tax Leader, PricewaterhouseCoopers, Taiwo Oyedele, read, “All services, including telecommunication services, provided in Nigeria shall be charged with duties of excise at the rates specified under the duty column in the Schedule as the President may by order prescribe pursuant to section 13 of this Act.”

Since July 2022, the Federal Government has tried, many times, to implement a five per cent excise duty on telecom services to boost revenue generation. Many of these attempts were met with pushbacks and cumulated in a recent communication by the Minister of Communications and Digital Economy, Isa Pantami, that the government has exempted the telecoms sector from excise duty tax.

According to Pantami, the Information, Technology and Communication sector, especially the telecom industry, is overburdened by excessive and multiple taxations, and any additional tax on the sector would affect the sector if the government fails to take any precautions.

The government announced in March 2023 that it was concerned about the sufferings of Nigerians and had exempted telecoms from excise duty. However, its new Fiscal Policy Measures for 2023 via a circular dated 20 April 2023, signed by the former Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed it had gone back on its words.

According to industry experts, excise duty on telecoms tax is now law and would be implemented once the Federal Government releases its modalities for collection.

One highly placed industry expert who didn’t want to be named due to the sensitivity of the matter told The PUNCH, “Yes, we are aware. The excise duty is five per cent. We are shocked too, but the finance minister smuggled it in. This is an additional cost for us, and the cost is expected to go up on the side of the consumers.

“We are supposed to implement from June 1, but we have not started yet because there is no modality for collection yet. We were just informed that it has been gazetted. We don’t know how this will impact cost, but we are waiting for modalities.”

However, according to the Chairman, Association of Licensed Telecom Owners of Nigeria, Gbenga Adebayo, the telecoms sector remains exempted from the tax because of the presidential approval that was granted to it by the former president.

He told The PUNCH, “Our sector is exempt from it. We have approval from the former minister that the sector is exempted.

“It is in the act, but we got a presidential exemption, so we are unlikely to suffer from the tax. If we do, we are going to pass it on to the subscriber, no doubt. Because we are just going to act as collection agents.”