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FG Moves to Begin Implementation of 5% Excise Duty on Telecom Services

FG Moves to Begin Implementation of 5% Excise Duty on Telecom Services

Oghenevwede Ohwovoriole in Abuja

In spite of the existing 7.5 per cent Value Added Tax (VAT) that Nigerians pay for goods and services, the federal government, yesterday revealed plan to implement the five per cent excise duty on telecoms services which it had previously intimated Nigerians about.

With this policy, for every call made by telecom subscribers, they would now pay five per cent of the total cost of the voice call, which would be deducted from the subscriber’s account by the telecom operator, and remit same to government.

The five per cent excise duty is an additional fee that the telecom subscriber pays, which is different from the cost of voice call.
The federal government disclosed this yesterday at a stakeholders’ meeting in Abuja, organised by the Nigerian Communications Commission (NCC).
The Minister of Finance, Budget and National Planning, Mr. Zainab Ahmed was represented by an Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, while the Assistant Chief Officer in the ministry, Frank Oshanipin, did the ministry’s presentation.

Zainab made the disclosure in her presentation at the stakeholders’ forum on implementation of excise duty on telecommunications services in Nigeria
According to Oshanipin, “The five per cent excise duty has been in the Finance Act 2020 but hasn’t been implemented.”

The delay to in implementation was as a result of government’s engagement with stakeholders.
He added that payments would be made latest 21st of every month.

He further said: “The duty rate wasn’t captured in the Act because it is the responsibility of the President to fix rate on excise duties and he has fixed five per cent as the duty rate for telecommunication services, which include, GSM services.

“It is public knowledge that our revenue cannot run our financial obligations, so to that effect we are to shift our attention to non-oil revenue.
“The responsibility of generating revenue to run government lies with us all,” he added.

The Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo, however said operators would not be able to subsidise the five per cent excise duty on telecom services as a result of the 39 multiple taxes that they pay, coupled with the epileptic power situation that had compelled operators to spend so much on diesel.

The President of the Association of Telecommunications Companies of Nigeria, (ATCON), Ikechukwu Nnamani who was represented by the Executive Secretary of ATCON, Ajibola Olude, said, “the five per cent excise duty on telecom services would not be in tandem with present realities,” adding that the industry was bleeding.

Olude suggested that the idea be stepped down as it would lead to job loss.
“The idea untimely and not well intended, because the industry is not doing well currently.” Olude said.
The Controller General of the Nigerian Customs Service (NCS), Col. Hameed Ali (Rtd) who was represented by the Assistant Controller  at NCS, Lami Wushishi, in her remarks said: “All active telecom service providers must pay the five per cent excise duty.”

However, the Executive Secretary ALTON, Gbolahan Awonuga, said the five per cent telecom excise duty was not healthy for the industry because telecom services providers already pay two per cent of their annual revenue to the NCC.

The Executive Vice Chairman/CEO of the Nigerian Communications Commission,  Prof. Umar Garba Danbatta, who was represented by the Executive Commissioner, Stakeholders Management, Adeleke Adewolu, in his opening remarks said: “As communicated in the federal government Circular of March 1, 2022, the five per cent Excise Duty was to have been implemented as part of the 2022 Fiscal Policy Measures, but the industry considered the earlier scheduled commencement date of June 1, 2022 inadequate and we duly took this up with the federal government.”

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