Nigeria’s government has suspended plans to impose a 5% excise duty on telecommunications services.

According to officials while the excise duty is covered by the Finance Act 2020, authorities decided to suspend it following engagement with stakeholders.

However, the government has since established a committee - chaired by the Minister of Communications and Digital Economy Isa Ali Pantami - to immediately review the policy.

Pantami, who is also chairman of the Presidential Council on Digital Economy and e-Governance, said he opposed the excise duty because it is a threat to the digital economy, with the telecommunications industry already over-taxed.

There is an already existing 7.5% value added tax (VAT) on telecommunications services.

He said, “Excise duties are usually imposed on luxury goods and not telecommunication services that are increasingly becoming essential services for the survival of the people.”

Despite this, the excise duty has been welcomed by other Ministers, including the Ministry of Finance, Budget and National Planning, with the Nigerian Customs Service announcing its readiness to start collecting the excise duty.

Industry bodies have expressed concern.

Gbenga Adebayo, chairman of the Association of Licensed Telecom Owners of Nigeria (ALTON) said: “It means that subscribers will be paying 12.5% on telecom services because we will not be able to subsidise the 5% excise duty on telecom services. This is as a result of the so many multiple taxes that we are already paying coupled with the epileptic power situation as we spend so much on diesel.”

President of the Association of Telecommunications Companies of Nigeria (ATCON) Ikechukwu Nnamani said: “The state of the industry is bleeding and so we suggest that the 5% duty be stepped down as it will lead to job losses.”