. Says tariff in line with Finance Act to drive revenue
The Federal Government has concluded plans to implement the new tariff hike of five per cent on calls and data.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who disclosed this yesterday, said the Government will begin the implementation of a five per cent excise duty tax on all voice calls, SMS and data services, in addition to the existing 7.5% Value Added Tax (VAT), paid for goods and services across all sectors of the economy.
She made the disclosure during a stakeholders’ meeting, organised by the Nigerian Communications Commission (NCC).
At that meeting, Ahmed, represented by the Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, noted that: “The five per cent excise duty has been in the Finance Act 2020, but has never been implemented.
“Henceforth, the five per cent excise duty will be collected by telecom operators and payment made to the federal government on a monthly basis, on or before 21st of every month.”
Circular in circulation
Special Adviser, Media & Communications to the Minister, Yunusa Tanko Abdullahi, in a statement, said there was a circular signed by Mrs Ahmed on the planned hike, which was addressed to the Communication Minister and other relevant ministries and agencies of government.
“The circular Referenced No. F. 17417/VI/286 dated 1st March 2022, and titled: “Approval for Implementation of the 2022 Fiscal Policy Measures and Tariff Amendments,”
This is despite the comments by Minister of Communication and Digital Economy, Dr Isa Ali Pantami, concerning the five per cent excise duty hike on telecoms services.
Henceforth, the five per cent excise duty will be collected by telecom operators and payment made to the federal government on a monthly basis, on or before 21st of every month.
Abdullahi said: “The circular was addressed to the Secretary to the Government of the Federation, Attorney-General of the Federation, Ministers of Industry, Trade and Investment; Agriculture and Rural Development, and; Mines and Steel and Development. Others are Ministers of Health, Aviation, Information and Culture, Budget and National Planning.
“Other heads of agencies copied in the circular are Accountant-General of the Federation, Comptroller-General of Customs, Governor of the Central Bank of Nigeria, Executive Chairman of the Federal Inland Revenue Service and the Director-General of the Raw Materials Research and Development Council.
“Others are the Executive Secretary of Nigerian Export Promotion Council (NEPC) and the Executive Secretary of the Nigerian Investment Promotion Commission.”
“Recall that the Finance Act, 2020 introduced ‘Telecommunication Services’ provided in Nigeria to be liable to excise duty under Section 21 (2) of the Customs and excise tariff etc. (Consolidation) Act, CAP. C49, LFN 2004.
“It, therefore, means that all stakeholders have by that singular provision been aware of the Act.
“The excise duty on telecommunication services provided in Nigeria introduced through the Finance Act, 2020, with statutory enactment on 1st January, 2021, is yet to be implemented to date.
“This is considering the need to ensure a reasonable transition period before the implementation of the new tax, as well as providing clarity to all stakeholders on implementation modalities.”
An issue as serious as the excise tariff cannot be taken single-handedly, as all stakeholders and agencies have been involve…
Tariff implementation
Abdullahi noted that the circular provided a 90-day moratorium effective March 1st, before the implementation of the excise tax, which is yet to be implemented.
He continued: “An issue as serious as the excise tariff cannot be taken single-handedly, as all stakeholders and agencies have been involved including Manufacturers Association of Nigeria (MAN) and Association of Telecom Operators of Nigeria (ALTON), who wrote to the Ministry to be involved in the modalities for implementation of the excise duty.
“Also recall that recently, Dr Pantami rejected the planned implementation of the five per cent excise duty in the Nigerian telecoms sector.
“He expressed his disapproval of the policy at a telecom forum in Lagos, organised by the Nigeria Office for Developing the Indigenous Telecoms Sector (NODITS), an agency domiciled in the Nigeria Communications Commission (NCC).
“He said that he would explore every legitimate means to stop the planned five per cent excise duty tax on telecom consumers, faulting the timing and process of imposing the tax on the telecom industry, insisting that part of the responsibility of a responsive government was not to increase the challenges citizens were facing.”
However, Ahmed argued that “In view of the above position of Dr Pantami, there could be the question whether he was absent in the whole processes that resulted in the Finance Act, which is a product of both the National Assembly and Federal Executive Council (FEC).
She said: “Suffice this to say that before the Act, the Finance Bill would have passed through the FEC of which Dr Pantami is a member and the National Assembly. In other words, he was involved in the making of the Finance Act, which spells the said excise tariff hike policy.
“Therefore, he could not obviously have had a point in his dissenting views even as the National Assembly could not have contradicted itself on this matter, because the parliament had passed the Finance Bill before President Muhammadu Buhari signed it into law.”
She noted that although Nigeria is celebrated as the largest economy in Africa, translating this wealth into revenues remains a challenge.
“Considering this in line with the provision of the revised National Tax Policy, this provides the framework for a sustainable tax system that would ensure reliable sources of revenue to the government and support economic development.
“Subsequently, in line with the Finance Act, the federal government introduced “Telecommunication Services” provided in Nigeria to be liable to excise duty under Section 21 (2) of the Customs and Excise Tariff etc. (Consolidation) Act, CAP. C49, LFN 2004.”
Ahmed further noted that Nigeria is one of the largest telecommunication markets in Africa, and available report from the NCC shows four categories of operators, i.e. mobile (GSM), fixed telephony operators (fixed/ fixed wireless), internet service providers (ISPS) and others (operators other than mobile & fixed telephony, ISPs).
Subscribers’ numbers also continue to grow substantially, having increased from about 180 million in 2019 to over 200 million active subscriptions in 2020.
This, she reiterated, represents an increase of over nearly 11% in total subscriptions, adding that many countries in sub-Saharan Africa such as Tanzania, Uganda, Malawi, Kenya, Rwanda, Ghana and Burundi currently impose excise duty on telecommunication services ranging between 5 and 20%.
