Excise taxes on telecommunication services will bring in roughly N160.46 billion for the federal government in 2023.
The Nigerian Communications Commission estimates that in 2021, the combined income of GSM, Fixed Wired, and Internet Service Provider providers will be N3.21 trillion. The government would generate roughly N160.46 billion if it implemented its 5% excise levy on telecom services.
However, the figure makes the assumption that the telecoms’ revenue will remain constant. However, it might actually be greater or lower depending on the state of the economy in 2022.
The federal government recently announced plans to impose a 5% excise fee on all telecom services provided within the country.
This was revealed by the Minister of Finance Budget and National Planning, Zainab Ahmed, during a stakeholders’ forum on the implementation of excise duty on telecommunications services in Nigeria.
Ahmed, who spoke through the Assistant Chief Officer of the Ministry, Mr Frank Oshanipin, said the implementation of the excise duty was in a bid to increase the government’s revenue.
She said, “The duty rate was not captured in the Act because it is the responsibility of the President to fix rate During a stakeholders’ forum on the implementation of excise duty on telecommunications services in Nigeria, the Minister of Finance, Budget, and National Planning, Zainab Ahmed, disclosed this.
The installation of the excise charge, according to Ahmed, who spoke through the Assistant Chief Officer of the Ministry, Mr. Frank Oshanipin, was done in an effort to boost government revenue.
She stated: excise duties and he has fixed five per cent for telecommunication services which include GSM.
“It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue. The responsibility of generating revenue to run government lies with us all.”
The additional 5% tax will be borne by telecom users, according to Gbenga Adebayo, Chairman of the Association of Licensed Telecom Owners of Nigeria.
The finance minister said at the event that the tax will go into effect soon, but since then, there have been questions over whether the excise duty will really go into effect.
Isa Pantami, the minister of communications and the digital economy, declared on Monday that he opposed the levy and would do all in his power to prevent its introduction.
He claimed that the telecom sector was already contributing significantly to the nation’s revenue creation and that any additional attempts to expand it might have a detrimental effect.
He made the following remarks at the inaugural Nigerian Telecommunications Indigenous Content Expo, which was put on by the Nigeria Office for Developing the Indigenous Telecom Sector: “The ministry of communications and digital economy is not satisfied with any effort to introduce excise duty on telecommunication services.”
He added, “Beyond making our position known, we will go behind the scenes and go against any policy that will destroy the digital economy sector. We will go to any extent to legitimately and legally defend its interest.”
The cost of the levy will presumably be passed on to customers of telecommunications services.
Ajibola Olude, the chief operating officer of the Association of Telecommunications Companies of Nigeria, commented on the potential revenue the Federal Government could get from the implementation of this tax, saying “I don’t see the Federal Government implementing the five per cent excise duty.
“The Minister for Communications and Digital Economy faulted the plan saying it didn’t follow due process. There are laid-down rules before implementing that 5 per cent excise duty. Another reason why I don’t see it being implemented is because of the current macroeconomic factors in the country. Prices have not been stable, if they implement it, it will lead to an upsurge in crimes.”
The COVID-19 outbreak prevented the government from enforcing the tax as intended in 2020, according to Adeolu Ogunbanjo, President of the National Association of Telecoms Subscribers, who was present at the meeting when the application of the excise charge was discussed.