Nigerians will be charged extra for phone, SMS, and data services as FG plans to raise tax to 12.5%

The Federal Government intends to apply a 5% inclusive excise charge on telecommunications services in Nigeria, raising the tax on telecommunications services to 12.5%.

The Minister of Finance, Budget, and National Planning, Zainab Ahmed, announced this at a stakeholders’ forum on the implementation of excise duty on telecommunications services in Nigeria, held on Thursday in Abuja.

At the event organized by the Nigeria Communication Commission (NCC), Ahmed, who was represented by the Ministry’s Assistant Chief Officer, Mr. Frank Oshanipin, said the 5% excise charge was in the Finance Act: 2020 but had not been enacted.

Observations from the Minister of Finance, Budget, and National Planning

According to Ahmed, the government’s interaction with stakeholders caused the delay in its implementation.

She said, “Payments are to be made on monthly basis, on or before 21st of every month.

“The duty rate was not captured in the Act because it is the responsibility of the President to fix rate on 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.’’

Telecoms customers will suffer the brunt of a new levy when providers raise their prices

The additional 5% tax will be passed on to telecoms customers, according to Gbenga Adebayo, Chairman of the Association of Licensed Telecom Owners of Nigeria (ALTON).

He said, “It means that subscribers will now pay 12.5 per cent tax on telecom services, we will not be able to subsidise the five per cent excise duty on telecom services.

“This is as a result of the 39 multiple taxes we already paying coupled with the epileptic power situation as we spend so much on diesel.’’

The 5 percent excise charge, according to ALTON’s executive secretary Mr. Gbolahan Awonuga, is not good for the sector because telecom service providers already pay the NCC 2 percent of their annual revenue.
He said, “We pay two per cent excise duty to NCC from our revenue, 7.5 per cent VAT and other 39 taxes. We are going to pass it to the subscribers because we cannot subsidise it.’’

Here are the key points you should note

  • Remember that President Muhammadu Buhari authorised the collection of 5% as an excise levy on telephone recharge cards and vouchers? That was reported earlier in May.
  • The fee is a new addition to the country’s list of commodities subject to excise duty in the Finance Act.
  • Excise duty is a tax imposed during the production process. It is also a type of indirect tax on the purchase or use of specific items, services, products, or activities like gambling, alcohol, narcotics, tobacco, and so forth, primarily to deter their use and consumption. The list has been expanded to include beverages, non-alcoholic drinks, etc. under Nigeria’s Finance Act.
  • The Federal Government is reportedly expecting to raise at least N150 billion from the duty as the collection was one of the new provisions in the President Buhari-signed 2020 Finance Act.

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