- Says implementation will drive revenue growth in line with Finance Act
BY COBHAM NSA – Amid discordant tunes from some top officials, the Federal Government says there is no going back on its planned implementation of a five percent tariff hike in calls and data nationwide.
Interestingly, the government’s move is coming against the backdrop of reservations and misgivings expressed by the Minister of Communication and Digital Economy, Prof. Isa Ali Pantami.
But a statement by the Federal Ministry of Finance Budget and National Planning, which insisted that the tariff hike implementation will go as planned, said; “The implementation of five percent excise duty tax on all voice calls, SMS and data services, in addition to the existing 7.5 percent Value Added Tax (VAT), paid for goods and services across all sectors of the economy”.
The Minister of Finance Budget and National Planning, Mrs Zainab Ahmed, who spoke at a stakeholders’ meeting organised by the nation’s telecoms industry regulator, Nigerian Communications Commission (NCC), said; “Henceforth, the five percent 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.”
According to the Minister, a circular stating the planned hike has already been addressed to the Communications and Digital Economy Minister and other relevant ministries and agencies of government for immediate implementation.
Represented at the event by the Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, the Minister, while reacting to her Communications counterpart’s opposition to the tariff hike, said; “The five percent excise duty has been in the Finance Act 2020, but has never been implemented.
“This is to convey that his Excellency Mr. President has approved Supplementary Protection Measures (SPM) for implementation of ECOWAS Common External Tariff (CET) 2022-2026 and excise duties on non-alcoholic beverage, cigarettes and Tobacco products as well as telecommunication services with effects from 1st April 2022.”
Further explaining the government’s position on the issue, the circular signed by Mrs Ahmed said; “A grace of ninety (90) days commencing from the date of implementation of this circular i.e April 1, 2022, shall be granted to all importers who had opened Form M and must have entered into irrevocable trade agreement before the coming into effect of this circular to process and clear these goods at the prevailing duty rates.
“However new import transactions entered from the 1st of April 2022 will be subjected to the new import duty regime” and the development is in line with the Finance Act, 2020 which states that ‘Telecommunication Services’ provided in Nigeria would be liable to excise duty under Section 21 (2) of the Customs and excise tariff, etc. (Consolidation) Act, CAP. C49, LFN 2004.
Maintaining that “all stakeholders have by that singular provision been aware of the Act”, the Minister said; “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 till date”.
Mrs Ahmed, while offering reasons for the delay in the tariff hike implementation, said the government was considerate “To ensure a reasonable transition period before the implementation of the new tax, as well as providing clarity to all stakeholders on implementation modalities.”
To further drive home issues around the delay, it was also captured in the statement that; “An issue as serious as the excise tariff cannot be taken single-handedly, as all stakeholders and agencies have been involved, including the Manufacturers Association of Nigeria (MAN) and the Association of Telecom Operators of Nigeria (ALTON), who wrote to the Ministry to be involved in the modalities for implementation of the excise duty.”
Additionally, the Finance Ministry’s press statement said; “Mrs. Ahmed, had vide Circular dated 1st March 2022 informed the Nigeria Customs Service (NCS) and other heads of government Ministries, Departments and Agencies (MDAs), including the Federal Ministry of Communication and Digital Economy, about Mr. President’s approval of the implementation of the five percent excise duty on telecommunication services with effect from 1st June 2022.”
Recalled that the Minister of Communication and Digital Economy, Prof. Pantami had recently expressed disapproval over the planned implementation of five percent excise duty in the Nigerian telecoms sector so as not to further inflict hardship on Nigerians.
Addressing 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), the Communications Minister promised to explore every legitimate means to stop the planned excise duty tax on telecom consumers, faulting the timing and process of imposing the tax on the telecom industry.
He insisted that part of the responsibility of a responsive government was not to increase the challenges citizens were facing, adding; “I have not been contacted officially. If we are, we surely will state our case.
“The sector that contributes to the economy should be encouraged. You introduce excise duty to discourage luxury goods like alcohol, but broadband in the telecom sector is a necessity.”
