In an unexpected turn of events, the Federal Government of Nigeria has chosen to reinstate a 5% excise levy on telecom services to boost revenue for the year. This announcement has taken many by surprise, given that the government had previously suspended the excise duty on proposed telecommunication services in September of the previous year and had eventually granted the industry an exemption in March.
Isa Pantami, the minister of communication, had reportedly pressured the government to cease the tax’s implementation in September, arguing that the telecoms industry faced threats from excessive and complicated taxation. In light of his persuasive argument, Pantami declared in March that the government had exempted the industry from tax duties. Pantami disclosed that the number of taxes ICT companies were required to pay at federal and state levels had risen from 39 in August to 41 in September 2022.
Contradicting Pantami’s announcement, a circular dated April 20, 2023, and signed by Zainab Ahmed, the minister of finance, budget, and national planning, indicates that the administration plans to move forward with the introduction of the 5% excise levy on telecom services. The document states, “The excise duty rate on telecommunication services remains as approved by Mr President and published in the Official Gazette No. 88, Vol. 109 of May 11, 2022”. The tax will apply to postpaid and prepaid internet and fixed and mobile telephone services.
Amid the ongoing economic turmoil, the government’s reversal of the tax exemption has sparked unease and uncertainty among consumers regarding the future of the telecom industry and the potential consequences for their finances. As a result of these additional taxes, telecom carriers’ customers will ultimately bear the financial burden, raising concerns among consumers. This decision arrived when Nigeria’s inflation rate surged to 22.04%, marking the third consecutive increase in 2023.
It remains to be seen how this policy change will impact Nigeria’s telecom industry, its customers, and the country’s pursuit of digital transformation. As the cost of telecom services is likely to increase, there is a risk of reduced accessibility to essential online resources and platforms for learning, which could hinder the nation’s overall progress in embracing the digital age. Furthermore, this reinstatement of the excise levy on telecom services could have broader implications on the country’s digital landscape and progress in digital literacy and tech skills.