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FG to Begin Implementation of Proposed Excise Duties on Telecom, Beverages in 2023

By Anastasia Agunwa:

The Federal Government has announced that it will start enforcing its proposed excise levies on communications services and drinks in 2023 through the Budget Office of the Federation.

This is in spite of criticism from the Nigerian Manufacturers Association and Communications and Digital Economy Minister Isa Pantami.

Pantami criticized the 5% tax on telecom services during the inaugural Nigerian Telecommunications Indigenous Content Expo, which was organized by the Nigeria Office for Developing the Indigenous Telecom Sector. He declared, “Any attempt to impose an excise levy on communications services is not satisfied with the Ministry of Communications and Digital Economy.

 “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 “2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper,” which was released on Friday by the Budget Office of the Federation, which falls under the Ministry of Finance, Budget and National Planning, outlined its strategy.

The ministry claims that this was done in an effort to increase its non-oil revenue sources. The minister added that the introduction of the telecoms service tax was projected to result in an exponential increase in excise duty collections.

The government stated that the NCS would develop frameworks for recovering duties, taxes, and relevant fees from transactions made over electronic networks when discussing the tax, which is the responsibility of the Nigeria Customs Service.

The office listed the full implementation of excise duty on telecom services, alcoholic, sugar-sweetened beverages, cigarettes, and tobacco items as one of the techniques that will be used to boost Customs’ revenue collections for the period of 2023–2025.

As a result of the telecom service tax and SSBs, excise income is anticipated to increase tremendously.

The law, it was informed, now gave the FIRS the authority to designate any person as its agent to withhold or collect VAT and remit it to the service.

The budget office described the situation facing the government, stating that “Revenue generation remains the major fiscal problem of the Federal Government.

“The systemic resource mobilisation problem has been compounded by recent economic recessions. Recognising that domestic revenue mobilization is important for sustainable development, the Federal Government has instituted the Strategic Revenue Growth Initiatives to improve government revenue and entrench fiscal prudence, with emphasis on achieving value for money.”

“These measures include improving the tax administration framework, including tax filing and payment, as well as the introduction of new and/or further increases in existing pro-health taxes like excise on sugar-sweetened beverages, tobacco, and alcohol. Mixed reactions have greeted the implementation of these measures.”

Speaking through Assistant Chief Officer of the Ministry, Mr. Frank Oshanipin, at a stakeholders’ forum on the implementation of excise duty on telecommunications services in Nigeria, Minister of Finance Budget and National Planning, Zainab Ahmed, said, “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 5% 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 the non-oil revenue. The responsibility of generating revenue to run the government lies with us all.”

Gbenga Adebayo, the chairman of the Association of Licensed Telecom Owners of Nigeria, had stated in response to the increased tax that telecom consumers will be responsible for the additional 5% tax, increasing the total tax paid by consumers to 12.5%.

There is plenty of time to continue advocating against it until then, according to Adeolu Ogunbanjo, president of the National Association of Telecom Subscribers. 

He further stated that It is regrettable that the Federal Government is still moving forward despite the minister’s displeasure.  On issues that fall under their responsibility, ministers are expected to advise the president. 

Nigerians will protest the government’s callousness. They shouldn’t implement it. 

He ended by saying “We will mobilise Nigerians to go against this.”

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