President Bola Tinubu, has reportedly suspended the five percent (5%) excise tax on telecommunication services.
The announcement was made by Dele Alake, the Special Adviser to the President on Special Duties, Communications, and Strategy, during a press briefing at the State House in Abuja on Thursday.
One surprising item in the Executive Orders is the President Tinubu supposed suspension of 5% Excise tax on telecommunication.
Industry watchers are wondering if the immediate past administration of President Muhammadu Buhari actually ‘removed’ the tax imposed on the industry by the office of the Minister of Budget and National Planning.
Recall that Professor Isa Ali Ibrahim Pantami, the immediate past Minister of Communications and Digital Economy, disclosed on Tuesday, March 21, 2023 at a press briefing where he provided updates on the status of the 5% excise duty on telecom, whose applicability to the telecom sector was objected by the Minister in August 2022, following which President Muhammadu Buhari suspended its application to the telecom sector and set up a Presidential Review Committee on Excise Duty in the Digital Economy Sector.
Pantami, who Chaired the Committee, specifically set up for the purpose of reviewing the proposed excise duty in the telecom sector, said the Committee had carried out its national assignment and accordingly submitted its report to the President, justifying why the sector should be exempted.
The Minister said the Committee’s submissions can be summed up in three arguments put forward to justify why additional burden in form of taxes or any level should not be imposed on the telecom sector to prevent a reversal of the important contribution the sector is making to the growth of the Nigerian economy.
“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,” he said.
As at the time of writing this report, Pantami, through his verified Twitter handle has shared a video in which he disclosed the removal of the 5% Excise tax on telecommunication service:
Nevertheless, in addition to the tax suspensions, President Tinubu also signed the Finance Act (Effective Date Variation) Order, 2023.
This order defers the implementation of changes outlined in the Act, originally scheduled for May 23, 2023, to September 1, 2023.
The decision to delay the commencement date was made to comply with the 90-day advance notice requirement for tax changes outlined in the 2017 National Tax Policy.
Furthermore, President Tinubu signed The Customs, Excise Tariff (Variation) Amendment Order, 2023, which shifts the start date for tax changes from March 27, 2023, to August 1, 2023.
This change aligns with the provisions of the National Tax Policy.