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No Going Back On Tariff Hike On Phone Calls, Data –Minister

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The Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, has said the Federal Government is on course to implement a new tariff hike on data and calls.

According to her, this will start with the implementation of a percent excise duty tax on all voice calls, SMS, and data services.

This is “in addition to the existing 7.5 percent Value Added Tax (VAT), paid for goods and services across all sectors of the economy,” a statement from the minister’s Special Adviser, Media & Communications, Yunusa Tanko Abdullahi, added.

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“The government made the disclosure on five percent excise duty during a stakeholders’ meeting, organised by the Nigerian Communications Commission (NCC), the telecoms industry regulator.

“At that meeting, Mrs. Zainab Ahmed, Honourable Minister of Finance, Budget and National Planning, who was represented by the Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, noted:

‘The five percent excise duty has been in the Finance Act 2020, but has never been implemented. 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,’” the statement read further.

Read full statement below:

FG On Course To Implement New Tariff Hike On Data, Calls – Ahmed

– Circular Issued On Planned Increase
– Implementation In Line with Finance Act To Drive Revenue Growth

The federal government has stated that it is set to implement the new tariff hike of five percent on calls and data.

The government through the Ministry of Finance, Budget and National Planning disclosed this, saying it would begin 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.

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The government made the disclosure on five percent excise duty during a stakeholders’ meeting, organised by the Nigerian Communications Commission (NCC), the telecoms industry regulator.

At that meeting, Mrs. Zainab Ahmed, Honourable Minister of Finance, Budget and National Planning, who was represented by the Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, noted: “The five percent excise duty has been in the Finance Act 2020, but has never been implemented.

“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.”

Against the comments by Prof. Isa Ali Pantami, Honourable Minister of Communication and Digital Economy, concerning the five percent excise duty hike on telecoms services, it is worth noting that there was a circular stating the planned hike which was addressed to the communication minister and other relevant ministries and agencies of government.

The circular Referenced No. F. 17417/VI/286 dated 1st March 2022, and titled “Approval for Implementation of the 2022 Fiscal Policy Measures and Tariff Amendments” was addressed to different Ministers, including Honourable Minister, Communications and Digital Economy and other heads of government agencies.

The circular was addressed to The Secretary To The Government of The Federation, Attorney-General of The Federation, Ministers of Industry, Trade an Investment, Agriculture and Rural development, Mines and Steel and Development.

Others are Ministers of Health, Aviation, Information And Culture, Budget And National Planning.

Other heads of agencies copied in the circular are Accountant-General of the Federation, Comptroller-General of Customs, Governor of the Central Bank of Nigeria, Executive Chairman of the Federal Inland Revenue Service and the Director-General of the Raw Materials Research and Development Council.

Others are the Executive Secretary of Nigerian Export Promotion Council (NEPC) and the Executive Secretary of the Nigerian Investment Promotion Commission.

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Part of the circular reads: “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 excuse duties on non-alcoholic beverage, cigarettes and Tobacco products as well as telecommunication services with effects from 1st April 2022.

The circular signed by Mrs. Ahmed reads: “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 transaction entered from the 1st of April 2022 will be subjected to the new import duty regime,” she said.

Recall that the Finance Act, 2020 introduced ‘Telecommunication Services’ provided in Nigeria to be liable to excise duty under Section 21 (2) of the Customs and excise tariff etc.

(Consolidation) Act, CAP. C49, LFN 2004.
It, therefore, means that all stakeholders have by that singular provision been aware of the Act.
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.

This is considering the need to ensure reasonable transition period before the implementation of the new tax, as well as providing clarity to all stakeholders on implementation modalities.

As a matter of emphasis, 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 & 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.

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The circular provided a 90-day moratorium with effect from 1st March, 2022 before the implementation of the excise tax. Currently, the excise tax is yet to be implemented.

An issue as serious as the excise tariff cannot be taken single handedly, as all stakeholders and agencies have been involved including Manufacturers Association of Nigeria (MAN) and Association of Telecom Operators of Nigeria (ALTON), who wrote to the Ministry to be involved in the modalities for implementation of the excise duty.
Also recall that recently, Prof. Pantami rejected the planned implementation of five percent excise duty in the Nigerian telecoms sector.

He expressed his disapproval for the policy at 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).

He said that he would explore every legitimate means to stop the planned five percent excise duty tax on telecom consumers, faulting the timing and process of imposing the tax on the telecom industry, insisting that part of the responsibility of a responsive government was not to increase the challenges citizens were facing.

“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,” he said further.

In view of the above position of Prof. Pantami, there could be the question whether he was absented in the whole processes that resulted in the Finance Act, which is a product of both the National Assembly and Federal Executive Council (FEC).

Suffice this to say that before the Act, the Finance Bill would have been through the FEC of which Prof. Pantami is a member.

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1 Comment

1 Comment

  1. chijioke

    August 12, 2022 at 7:39 am

    Sincerely it often appears as if Zainab is clueless about the Finance portfolio she is handling. Always bringing anti business initiatives and poorly articulates tax regimes that could further exuberate our already unforgiving business environment.
    Despite objections from Communications minister the govt is still going ahead with the tax. It appears govt agencies are often at divergent positions on every issue.

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