The Association of Telecommunications Companies of Nigeria (ATCON) has strongly opposed the proposed reintroduction of a 5% excise duty on the telecommunications sector, warning that it could impose a heavy burden on the industry and negatively impact consumers. ATCON cautioned that the tax would lead to increased costs for users and hinder growth in a sector vital to Nigeria’s digital economy.
ATCON President Tony Emoekpere expressed concerns about the timing of the proposal, which arises amidst ongoing economic challenges. “We had 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 cope with rising operational costs. Instead, we are faced with a price hike that offers no benefit to the sector,” Emoekpere stated during an interview with Hi-Tech.
Emoekpere revealed that ATCON plans to engage with the Ministry of Communications to understand the rationale behind the sudden reappearance of the excise duty proposal. “The previous minister successfully shelved this idea, so it’s surprising to see it come up again. We will reach out to the ministry to clarify and push to prevent its implementation,” he added.
Beyond rejecting the tax, Emoekpere urged the federal government to prioritize support for the telecom sector, which plays a crucial role in Nigeria’s economy. He emphasized the need to lower operational costs for telecom operators instead of imposing additional taxes.
“One of our biggest challenges is the high cost of diesel, which powers telecom infrastructure. With the liberalization of the foreign exchange market, diesel prices have soared. Currency fluctuations directly affect petroleum product prices, placing tremendous financial strain on the industry,” Emoekpere explained.
To address these issues, Emoekpere called for tax relief or incentives and promoted local production of key telecom inputs. “If the government isn’t open to allowing tariff increases, they should at least offer tax breaks or support local production. Imposing additional excise duties will only worsen the challenges in an already strained industry,” he stressed.
Emoekpere concluded by warning of the potential long-term consequences of reinstating the excise duty: “We don’t want to reach a point where communication becomes unaffordable for the average Nigerian. The telecom sector is vital for Nigeria’s growth, and further taxation could cripple progress.”
Background on the Policy
On July 6, 2023, President Bola Tinubu signed four executive orders, including one that suspended the 5% excise tax on telecommunications services to ease the negative impact of tax hikes on businesses and households. However, the proposed Nigeria Tax Bill 2024 seeks to reinstate the excise duty on telecommunications services, as well as on gaming, betting, and lotteries, with the excisable amount based on service provider charges, monetary or otherwise.