Minister of Finance, Budget and National Planning, Zainab Ahmed has announced the federal government plans to begin the implementation of a five percent excise tax on all voice calls, SMS and data services.
Ahmed disclosed this during a stakeholders’ meeting, organised by the Nigerian Communications Commission (NCC), the telecoms industry regulator.
The new tariff, coming well over a year after it was signed into law through the Finance Act 2020, would be implemented alongside the existing 7.5 percent Value Added Tax (VAT) goods and services across all sectors of the economy.
Ahmed’s announcement would override a recent comment by the Minister of Communication and Digital Economy, Isa Pantami rejecting the planned implementation of a five percent tariff in the Nigerian telecoms sector.
Pantami had insisted that he would explore every legitimate means to stop that additional tax burden on telecom consumers, faulting the timing and process of imposing the policy on the telecom industry.
He further insisted that part of the responsibility of a responsive government was not to increase the challenges citizens were facing.
“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 had stated.
However, the finance minister insisted that the five percent excise duty has been in the Finance Act 2020, but has never been implemented, allowing time and understanding by the citizens.
“Henceforth, the five percent 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,” she stated.
Reacting to Pantami’s comment, Ahmed cited a 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” which was addressed to different Ministers, including the Minister, Communications and Digital Economy and other relevant heads of government agencies.
That circular was specifically addressed to The Secretary To The Government of The Federation, the Attorney-General of The Federation, Ministers of Industry, Trade and Investment, Agriculture and Rural Development, 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, Director-General of the Raw Materials Research and Development Council, Executive Secretary of Nigerian Export Promotion Council (NEPC) and the Executive Secretary of the Nigerian Investment Promotion Commission.
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.
“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 transaction entered from the 1st of April 2022 will be subjected to the new import duty regime,” she had further stated in the circular.
The new tariff became necessary as the government battles low revenues which have over bloated the country’s debt and stunted development.
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.
The excise duty on Nigeria’s telecommunication services introduced through the Act with statutory enactment on January 1, 2021, is yet to be implemented to date.
The delay was to ensure a reasonable transition period before the implementation of the new tax, as well as provide clarity to all stakeholders on implementation modalities.