FG Set to Reintroduce 5% Excise Duty Tax on Telco Services

The Federal Government of Nigeria is set to reintroduce a 5% excise duty tax on Telco services after it was exempted last month.

The imposition of a 5% excise duty tax on telco services is part of the government’s 2023 Fiscal Policy measures and tariff amendments which have been approved by President Muhammdu Buhari.

In a circular shared on LinkedIn by the Fiscal Policy Partner and Africa Tax Leader, PWC, Taiwo Oyedele, part of the 2023 Fiscal Policy Measures and Tariff Amendments reads,

“This is to confirm that His Excellency, Mr. TelPresident has approved the implementation of the 2023 Fiscal Policy Measures made up of Supplementary Protection Measures (SPM) for the implementation of the ECOWAS Common External Tariff (CET) 2022-2026 and a revised excise duty rates on alcoholic beverages, cigarettes & Tobacco products, as well as introduction on excise duty on Single-Use Plastic (SUPs).

“Telecommunication Tax- the 2023 FPM confirms the excise duty on telecommunication services earlier introduced via the Finance Act 2020 and prescribed in the Official Gazette No. 88, Vol. 109 of 11 May 2022 approved by the President. The tax is applicable on mobile telephone services (GSM), fixed telephone and internet services, both postpaid and prepaid at the rate of 5%.”

Investors King understands that concerning the proposed implementation of excise duty tax on Telecom services, telecommunication consumers under the aegis of the National Association of Telecoms Subscribers are currently in court to counter the government’s move.

Speaking on the issue, the President of the Association of Telecommunications Companies of Nigeria, Mr. Tony Emoekpere, said,

“If the excise duty tax on telecom services is reintroduced, the advantages of its removal will be eroded. This sets us back, we have always been complaining about multiple taxations, and the removal of excise duty was a relief from the Federal Government on the challenges we were facing.

“Do not forget that some of these multiple taxations we are facing are in areas where the Federal government does not have a direct impact like in the states, the FG didn’t have control over that. The removal helped the industry, but putting it back just sets us back to the challenges we have been facing all this while.”

Federal Government implementation of a 5% excise duty tax on Telco services is coming after it was dropped in March 2023, after six months of intense deliberations with the telecommunications industry stakeholders.

Recall that Nigeria’s Minister of Communications and Digital Economy, Isa Pantami during the suspension of the 5% tax had expressed concerns that the industry is already overburdened by excessive and multiple taxations, which will likely adversely affect the sector if the government fails to take any precautions.

With the reintroduction of a 5% excise duty on telco services, it could discourage Nigerians from using telecommunication services which have become a necessity for many. It could also negatively impact the telco sector and further contribute to more hardship for Nigerians.