Nigeria has suspended plans to add a 5% excise duty on telecommunications services, saying the sector is already overburdened with taxes.
The move comes despite the need for new revenue streams in a country facing rising debt servicing costs, crushing fuel subsidies and a plunge in oil exports due to underinvestment and industrial-scale theft.
Isa Pantami, communications and digital economy minister, said in a statement that the potential tax could ‘impact very negatively’ on the digital economy and was on hold until a committee could review it.
The statement said the sector already faced 41 different categories of tax, some of them duplications from multiple tiers of government.
The Federal Ministry of Finance, Budget and National Planning, had last month, notified the telecom sector of the intention of the government to introduce a 5% excise duty on telecom operation, in addition to the 7.5% Value Added Tax(VAT) that all sectors of the economy pay for goods and services rendered.
In the last quarter of 2020, ICT alone, without including digital services, contributed 14.7% to Nigeria’s GDP. In the second quarter of 2021, the sector contributed 17.9% to the GDP, while in the second quarter of 2022, ICT contributed 18.44% to GDP.
Cameroon, Kenya, Tanzania, Uganda and Zimbabwe have all introduced taxes that target mobile money payments.
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