…Says sector already overtaxed

By Emmanuel ELEBEKE

President Mohamadu Buhari has approved the exemption of telecommunications sector from payment of 5% excise duty earlier approved by Federal government.

The Minister of Communications and Digital Economy, Prof. Isa Ali Pantami disclosed this on Tuesday while briefing newsmen in Abuja.

He said the decision to exempt the sector from paying such tax was reached by the Presidential Committee set up last year to review the introduction of the Excise Duty by the Federal Ministry of Finance, which relied its report on 41 multiple taxes and levies being paid by the telecoms service providers in the industry.

Recall that the ministry of Finance had last year introduced 5% Excise Duty for telecommunications sector but the announcement was resisted by the minster of Communications and Digital Economy who argued that the tax would be too much for service providers in the telecom sector, considering the multiple taxes and levies they already pay in the sector.

Besides, he argued that he and other critical stakeholders were not consulted before the introduction was made.

The Minister said: ‘‘ We converge today with regards to the assignment given to us by the President. Historically, we had invited media on 5th September 2022 and briefed them after inaugurating the Presidential Committee on review of Excite Duty in telecom sector.

‘‘Prior to that, there was issue of 5% Excise Duty introduced to the sector without following due process, which was part of requirements for a subsidiary legislation. I was not contacted and when it was announced, I personally challenged it and wrote a letter to the President on 12th of August, 2022, demanding that the 5% duty be put on hold and also to set up a review committee to look into the issue critically and professionally and advise the President on best way to handle it. He gracefully approved the two prayers and directed me to chair the committee, among whom were the minister of finance, NCC EVC, representatives of the telecom service providers.

‘‘After inauguration of the committee, the committee conveyed a stakeholders forum on 5th September and the committee was directed to incorporate other people that will add value to the work and it did. On 14th December, 2022 another issue concerning the 5% excise duty came up in which I spoke against it and justified my stands in writing. I insisted that within the telecoms sector, there is 41 categories of charges and levies and so, there is no justification to add more burdens on a sector that is already doing well, contributing so much to the economy.

The Presidential Committee completed its work in first week of February, 2023 and invited other stakeholders before submitted its report. After a review, the committee argued there was no need for Excise Duty in the ICT sector, reason that the sector as at today has been paying 41 categories of charges and levies; that the sector has been contributing significantly to the economy, citing two countries in Africa that increased their excise Duties for their ICT sectors that led to the dearth of the sector in both economies.

‘‘Thirdly, the committee argued that the sector has set unprecedented record in terms of contribution to FDP. In Q1 2021, ICT sector alone contributed 14% to GDP, in Q2 2021 the sector contributed 17,9%, in Q2 2022 sector contributed 18.44% and in 2020, 2021 and 2022, the sector was rated the fastest growing sector without any subsidy, while other sectors even with subsidies were not doing well.

‘‘In furtherance of the justification of the position, the President had in 2022 directed Office of the Secretary to the Government of the Federation, SGF to invite two international firms to evaluate the whole ministries and agencies, which KPMG and Foreign Commonwealth and Development Office were among. At the end, the final report presented in October, 2022, out of 8 areas of evaluation, the ICT sector increased revenue generation by 594% and government revenue increased from N41bn to quarterly to 408bn.

‘‘So, the position of the committee is that the ICT sector is already contributing more than enough to the economy and so, other sectors which have not been contributing should be encouraged to do same.

‘‘WE have observed also that all other sectors have been increasing their goods and services except ICT sector. As at Oct. 2022, average price of GB was reduced from N1200 to N300. Is the only sector the prices had been reduced by 80%. Only one company in the ICT sector use 32,000 generators and consume 1m liters of diesel every day. My argument is that the current economic situation in the country does not favour increase of Excise Duty,’’ he added.

Earlier in his remarks, the Executive Vice Chairman of the Nigerian Communications Commission, Prof. Umar Danbatta said the outcome of the Presidential review Committee on Excise Duty is one of the major steps in sustaining growth in the nation’s telecom sector.

He applauded the Minister and President for the initiative.

He however, encouraged telecom consumers who feel shortchanged by the service providers, especially on data depletion to escalate their complaints to NCC.