The Federal Government of Nigeria has reintroduced a 5% excise duty on telecom services as part of the fiscal measures to be implemented this year. The announcement came as a surprise to many, as in September last year, the Federal Government suspended the proposed excise duty on telecommunication services and eventually exempted the sector from the duty in March.
In September, the government suspended the implementation of the tax, apparently under pressure from the minister of communication, Isa Pantami. Pantami stated that the telecoms industry was under threat from excessive and multiple taxes, pointing out that the number of taxes paid by ICT firms, at both the federal and state levels, had increased from 39 in August to 41 in September 2022, in just one month.
In March, Pantami announced that the government had exempted the sector from tax duties following his convincing argument. However, the recent fiscal policy measures for 2023, as revealed in a circular dated April 20, 2023, and signed by the minister of finance, budget, and national planning, Zainab Ahmed, suggests otherwise.
According to the circular, the government is set to proceed with the implementation of the five per cent excise duty on telecom services. The document reads, “The excise duty rate on telecommunication services remains as approved by Mr President and published in the Official Gazette No 88, Vol 109 of May 11, 2022.” The tax is applicable on mobile telephone services, fixed telephone services, and internet services—both postpaid and prepaid.
Telecom providers had asserted that their customers would have to bear the cost of the new taxes. This walk back by the government has left consumers concerned, and rightfully so, as the policy is coming at a time when the country’s inflation rate has risen to 22.04% —the third consecutive increase in 2023.
