In 2023, the Federal Government expects to earn N160.46 billion from telecommunications excise duty.
According to the Nigerian Communications Commission, the combined revenue of GSM, Fixed Wired, and Internet Service Providers in 2021 will be N3.21 trillion. If the government imposes a 5% excise duty on telecom services, it will generate approximately N160.46 billion.
The amount, however, assumes that telco revenue will remain constant. However, depending on economic fundamentals in 2022, it could be higher or lower in real terms.
The Federal Government recently announced a plan to impose a 5% excise duty on telecom services in the country.
This was revealed by Zainab Ahmed, Minister of Finance, Budget, and National Planning, at a stakeholders’ forum on the implementation of excise duty on telecommunications services in Nigeria.
Ahmed, speaking through the Ministry’s Assistant Chief Officer, Mr. Frank Oshanipin, said the excise duty was implemented to increase government revenue.
“The duty rate was not captured in the Act because it is the President’s responsibility to fix rates on excise duties, and he has fixed 5% for telecommunication services, which include GSM,” she explained.
“Because our revenue cannot cover our financial obligations, we must shift our focus to non-oil revenue.” We are all responsible for generating revenue to run the government.”
Telecom consumers will bear the brunt of the additional 5% tax, according to Gbenga Adebayo, Chairman of the Association of Licensed Telecom Owners of Nigeria.
The finance minister stated at the forum that the tax would be implemented soon, but questions have since arisen about whether the excise duty will be implemented at all.
Isa Pantami, the Minister of Communications and Digital Economy stated on Monday that he was opposed to the tax and would do everything possible to prevent its implementation.
According to him, the telecoms industry was already doing a lot in terms of revenue generation in the country, and any attempts to stretch it any further would be detrimental.
“The ministry of communications and digital economy is not satisfied with any effort to introduce excise duty on telecommunication services,” he said at the first edition of the Nigerian Telecommunications Indigenous Content Expo, which was organized by the Nigeria Office for Developing the Indigenous Telecom Sector.
“Beyond making our position known, we will work behind the scenes to oppose any policy that will destroy the digital economy sector,” he added. We will go to any length to protect its legitimate and legal interests.”
The tax will almost certainly be passed on to telecommunications customers, who will bear the brunt of the burden.
Ajibola Olude, Chief Operating Officer of the Association of Telecommunications Companies of Nigeria, commented on the amount the Federal Government might make from implementing this tax, saying, “I don’t see the Federal Government implementing the 5% excise duty.”
“The Minister for Communications and Digital Economy criticized the plan, claiming it violated due process.” There are rules in place before imposing the 5% excise duty. Another reason I don’t see it being implemented is because of the country’s current macroeconomic factors. Prices have not been stable; if they implement it, crime will increase.”
Adeolu Ogunbanjo, President of the National Association of Telecoms Subscribers, who was present at the forum where the implementation of the excise duty was discussed, told our correspondent that the government had planned to implement the tax in 2020 but had postponed its implementation due to the COVID-19 pandemic.