By Juliet Umeh

The Association of Telecommunications Companies of Nigeria (ATCON) has expressed strong opposition to the proposed reintroduction of a 5% excise duty on the telecommunications sector, warning that the tax could place a heavy burden on the industry and negatively impact consumers. ATCON cautioned that the tax would increase costs for users and hinder growth in a sector crucial to Nigeria’s digital economy.

ATCON President, Tony Emoekpere, voiced concern over the timing of the proposal, which comes 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 said during an interview with Hi-Tech.

Emoekpere revealed that ATCON plans to engage the Ministry of Communications to understand the reasoning 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 called on the federal government to prioritize supporting the telecom sector, which plays a pivotal role in Nigeria’s economy. He urged the government to focus on lowering operational costs for telecom operators rather than 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 tackle these issues, Emoekpere urged the government to consider tax relief or incentives and to promote 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, in a bid 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. The excisable amount would be based on service provider charges, monetary or otherwise.

The bill also introduces regulations on currency exchange transactions involving the naira, ensuring that such transactions align with the official exchange rate set by the Central Bank of Nigeria (CBN).