FG to introduce telecoms and drink taxes in 2023

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The federal government, through the Federation’s Budget Office, has revealed that it will begin implementing its proposed excise duties on telecommunications services and beverages in 2023.

This is despite backlash from the Minister of Communications and Digital Economy, Isa Pantami, and the Manufacturers Association of Nigeria.

Pantami had at the inaugural Nigerian Telecommunications Indigenous Content Expo organized by the Nigerian Bureau for the Development of the Indigenous Telecommunications Sector, criticized the 5% tax on telecommunications services. He said: “The Department of Communications and Digital Economy is not happy with any effort to introduce excise duties on telecommunications services.

“Beyond making our position known, we will go behind the scenes and oppose any policy that destroys the digital economy sector. We will do everything to legitimately and legally defend its interests.

The Federation Budget Office, under the Ministry of Finance, Budget and National Planning, unveiled its plan in its “Medium Term Expenditure Framework and Budget Strategy Paper 2023-2025”, which has been released Friday.

According to the ministry, this was aimed at increasing its non-oil revenue streams. The minister further said that he expects excise duty revenue to increase exponentially due to the introduction of telecommunications service charges.

Discussing the tax which is the responsibility of the Nigerian Customs Service, the government said that the NCS will introduce frameworks for the collection of appropriate duties, taxes and fees on transactions conducted over electronic networks.

Explaining one of the strategies that would be implemented to improve customs revenue collection during the period 2023-2025, the bureau said, “Full implementation of excise duties on telecommunications services, beverages alcoholic and sugary drinks, cigarettes and tobacco products.

“Consequently, excise revenue is expected to grow exponentially due to the introduction of telecom service charges and SSBs”

He explained that the law now allows the FIRS to appoint anyone as its agent to withhold or collect VAT and remit it to the service.

Stating the government’s predicament, the budget office said, “Revenue generation remains the federal government’s top fiscal challenge.

“The systemic problem of resource mobilization has been compounded by recent economic downturns. Recognizing that domestic revenue mobilization is important for sustainable development, the federal government instituted the Strategic Revenue Growth Initiatives to improve government revenue and entrench fiscal prudence, with an emphasis on value for money.

“These measures include improving the framework for tax administration, including tax filing and payment, as well as introducing new and/or new increases to existing pro-health taxes such as excise on sugary drinks, tobacco and alcohol Mixed reactions to the implementation of these measures.

Speaking at a stakeholder forum on the implementation of excise duty on telecommunications services in Nigeria, Minister of Finance, Budget and National Planning, Zainab Ahmed, who spoke through the Deputy Director of the Ministry, Mr. Frank Oshanipin, said: “The rate of duty was not reflected in the law because it is the responsibility of the President to set the rate of excise duty and that it has set 5% for telecommunications services that include GSM.

“It is common knowledge that our revenues cannot meet our financial obligations, so we must turn our attention to non-oil revenues. The responsibility of generating revenues to run the government falls on all of us.

In response to the new tax, the President of the Association of Licensed Telecommunications Owners of Nigeria, Gbenga Adebayo, said that telecommunications consumers would bear the burden of this additional 5% tax, bringing the total tax paid by consumers at 12.5%.

A report of the punch revealed that the federal government would generate around N160.46 billion from excise duty on telecom services if implemented in 2023.

Speaking to our correspondent, National Telecommunications Subscribers Association President Adeolu Ogunbanjo said, “We have plenty of time to continue advocating against this until then. They are ready to implement and impoverish more people when they come out.

“It is unfortunate that despite the Minister’s resentment, they continue to move forward. Why appoint the minister at all. Ministers must advise the President on matters within their competence. They should not implement it or else Nigerians will react to this callous nature of the government. That they turn to other sectors, why telecoms?

“We will mobilize Nigerians to go against this.”

MAN had previously opposed the imposition of taxes on alcoholic and soft drinks, saying it would hurt the industry.

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