Pantami objects to FG’s 5% tax on telco
By Abimbola Mohammed
Following the recently imposed five percent excise duty on telecommunications service as a means to generate funds for the national budget, the minister of communication and digital economy Prof. Isa Ali Pantami has said he will ensure that the decision made by the federal government is reversed.
The minister made this known at the maiden edition of the Nigeria Telecommunication Indigenous Content Expo in Lagos recently.
“Beyond, making our position known today, we will go behind the scenes and go against any policy that will destroy the digital economy sector. This is a sector we cherish so much and we are ready to go to any extent, legitimately and legally to defend its interest,” he said.
Prof. Pantami disclosed that the Nigerian Communications Commission (NCC) was not contacted officially, while faulting the ruling making process that didn’t involve the chairman of House Communications Committee.
“We have not been contacted officially. If we were, we would have pleaded our case. As a minister and based on the provision of the constitution of Nigeria, session 148, we are exercising power of Mr. President.
“When VAT was increased to 7.5 per cent, I was not consulted, I only heard the announcement and I think there is something questionable about the process. Our national assembly members were not also consulted despite the fact that they are part of the committee.”
Pantami added that the recent 2020 Q2 Gross Domestic Product (GDP) report, released by the National Bureau of Statistics (NBS), showed that the Information Communications Technology (ICT) contributed an unprecedented 17.83 per cent to Nigeria’s total GDP, adding that the sector should be encouraged and not discouraged by multiple taxation.
“You introduced excise duty to discourage luxury goods like alcohol. Broadband is a necessity. If you look at it carefully, Broadband contributes 2 per cent to 7.5 per cent to the economy. Imposing five per cent excise duty on operators will only bring hardship at this time, and that cannot be tolerated,” he averred.
He, however, advised the federal government to expand the scope, by taxing other sectors, while urging operators to come together and salvage the sector.
As an effort to support indigenous companies, the minister also tasked the Nigeria Office for Developing the Indigenous Telecom Sector (NODITS) to strictly enforce the National Policy for the Promotion of Indigenous Content in the Nigerian Telecommunications Sector.
The minister disclosed that the annual outflow of foreign exchange for the telecommunications sector amounts to approximately $2.16 billion, adding that this is a significant portion of the sector average annual budget and it is critical that this trend is reversed.
“There are also a higher percentage of foreigners among top management staff when compared with other staff, with Nigerians making up to 31 per cent, in relation to foreigners who make up to 69 per cent. For software, 77 per cent of software in use is foreign, while only 23 per cent are obtained locally.
It would be recalled that recently the federal government imposed five per cent excise duty on telecommunications services, as an effort to generate revenue to fund the national budget in the face of dwindling oil revenue.
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