FG Exempts Digital Economy Sector from 5% Excise Duty

The federal government has finally excluded the digital economy sector from the contentious five per cent excise duty proposed earlier in the 2022 Finance Act.

The federal government had earlier suspended the proposal pending the outcome of the recommendation of a presidential review committee on the five per cent excise duty on telecom equipment proposed by the Federal Ministry of Finance, Budget and National Planning.

The Minister of Communications and Digital Economy, Isa Pantami disclosed this yesterday, after receiving the report submitted by the Presidential Review Committee on Excise Duty in the digital economy sector.

At a session with journalists after the meeting, the minister said the president had approved the exemption of the digital economy sector from the five per cent excise duty tax.

“I am glad to say and announce to Nigerians that his Excellency Mohammadu Buhari, the president of the Federal Republic of Nigeria has approved the exemption of the digital economy sector from the five per cent excise duty to be paid. And this is because of the argument presented to him that the implementation will increase the suffering of citizens.

“And he strongly insisted that other sectors in our country are to be challenged to improve revenue generation for government not the sector that has already increased revenue generation by 594 per cent within only three years which is unprecedented in the history of Nigeria.”

According to Pantami, the telecom sector was already over-burdened by taxes and levies, adding that presently, 41 categories of taxes, levies and charges are already in the digital economy sector; hence there is no justification for an additional excise.

He stated: “There is no need for excise duty in the telecom sector because the industry is already heavily taxed up to 41 taxes.

“The sector has been contributing hugely to Nigeria’s economy; more tax burden destroys the industry.”

The minister further justified why the president had to exempt the digital economy sector from the five per cent tariff, saying, “this is the only sector where the prices of services have been reduced,” adding that “there is no justification for the government to impose more burden on its poor citizens.”

He stressed that many Micro, small and medium enterprises (MSMEs) and Small and Medium Enterprises (SMEs) depend on the sector for survival.

The minister further argued that increased taxation would take a toll on these businesses.

He revealed: “To this end, on March 6, President Muhammadu Buhari approved the exemption of the digital economy sector on the 5 per cent excise duty because it would harm the Nigeria citizens.”

The Executive Vice Chairman (EVC), Nigerian Communications Commission, (NCC), Prof. Umar Danbatta, in his remarks reiterated the commission’s commitment to improving the telecom industry.