The Association of Telecommunications Companies of Nigeria (ATCON) has strongly opposed the Federal Government’s intention to reintroduce a five percent excise duty on the telecommunications sector, cautioning that this move could impose significant burdens on the industry.
Previously, President Bola Tinubu signed four executive orders on July 6, 2023, which included the suspension of this excise tax on telecommunications services to alleviate the negative impact of tax increases on both businesses and consumers. However, recent discussions from the Presidential Tax Reform Committee suggested that the upcoming Nigeria Tax Bill 2024, currently before the National Assembly, could reinstate this tax, along with similar levies on gaming, betting, and lottery services.
The proposed excise duty would be based on the charges imposed by service providers, regardless of the form of payment.
ATCON has expressed grave concerns over the reintroduction of this tax, arguing it could lead to higher costs for consumers and stifle growth in a sector crucial to Nigeria’s digital economy.
Tony Emoekpere, the President of ATCON, highlighted the troubling timing of the proposal amidst ongoing economic challenges. “We had received assurances from the former minister that this issue was settled. It’s alarming to see it re-emerge now, especially as the industry has been advocating for a tariff increase to manage rising operational costs. Instead, we are confronted with a price hike that offers no benefits to the sector,” he stated.
In light of these developments, ATCON plans to engage the Ministry of Communications to seek clarification on the sudden revival of the excise duty proposal. “The previous minister had successfully shelved this idea, so it’s surprising to see it come up again. We will reach out to the ministry to understand why this proposal is resurfacing and advocate against its implementation,” Emoekpere added.
Beyond opposing the excise duty, Emoekpere urged the government to prioritize support for the telecommunications sector, which plays a vital role in the nation’s economy. He called for a focus on reducing the high operational costs facing the industry rather than imposing additional taxes.
“The heavy reliance on diesel to power telecom infrastructure is one of our most significant challenges. The recent liberalization of the foreign exchange market has caused diesel prices to soar, and currency fluctuations directly affect the cost of petroleum products, placing a tremendous financial strain on the industry,” he explained.
Emoekpere emphasized the need for tax relief or incentives and encouraged the government to support local production of essential telecom inputs. “If the government is unwilling to permit tariff increases, they should at least offer tax breaks or support for local production. Additional excise duties will only worsen the challenges confronting an already strained industry,” he stressed.