Following the backlash from both consumers and stakeholders, the Federal Government has suspended the introduction of five percent excise duty proposed for the digital economy sector.
The tax was earlier proposed by the Minister of Finance Zainab Ahmed as a way to generate more revenue to cushion the effects of revenue shortfalls from crude oil export.
The Minister of Communications and Digital Economy, Isa Pantami announced the suspension in Abuja during the inauguration of a committee that will review the policy on Monday.
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Pantami, who was among those who earlier criticized the proposal, said he personally rejected the policy and advised President Muhammadu Buhari against it in view of the effects it would have on the digital economy.
He said the introduction of excise duty in the telecommunication and information and communications technology industry would jeopardize the successes already recorded within the industry, adding that currently, the ICT sector is over-burdened with multiple taxations both at the federal and state level.
Pantami further disclosed that there are more than 41 taxes that telecommunication and ICT companies are paying and that it would be unfair to subject them to payment of excise duty.
However, a presidential committee on the review of the excise duty in the digital economy has been inaugurated by the federal government. The committee is made up of Isah Pantami as chairman and the Minister of Finance as a member.
Other members are the Executive Secretary of the Nigerian Communications Commission (NCC), Professor Umar Danbatta, the Executive Chairman of the Federal Inland Revenue Service, Muhammad Nami and representatives of the telecommunication industries.
But in response to Pantimi’s disapproval of the five percent communication tax proposal, Ahmed said he was, together with other relevant agencies, informed about the implementation, which was approved by Buhari.
The finance minister also faulted Pantami’s disapproval, adding that he was involved in the Finance Act.
“Against the comments by Isa Ali Pantami, honourable minister of communication and digital economy, concerning the five percent excise duty hike on telecoms services, it is worth noting that there was a circular stating the planned hike which was addressed to the communication minister and other relevant ministries and agencies of government,” Ahmed said in a statement issued by the ministry.
“The circular Referenced No. F. 17417/VI/286, dated March 1, 2022, and titled “Approval for Implementation of the 2022 Fiscal Policy Measures and Tariff Amendments” was addressed to different ministers, including the honourable minister, communications and digital economy and other heads of government agencies.”
The backlash generated by the federal government’s move to implement the five percent tax was based mainly on the concern that it will overburden the telecom sector with taxes. Nigeria’s telecom sector has served as the country’s cash cow in the face of economic strains emanating from Covid-19 and oil revenue shortfalls.