The National Assembly has proposed a move to reinstate a 5% excise duty on telecommunications services as well as gaming and betting activities, in an effort to reform Nigeria’s tax framework.
This tax initiative follows President Bola Tinubu’s executive orders on July 6, 2023, which included a suspension of the 5% excise tax on telecommunications aimed at reducing the financial burden on businesses and households.
The proposal is detailed in an executive bill titled the “Nigeria Tax Bill 2024,” which aims to reintroduce the excise duty. The bill states, “The amount of an excisable transaction is the amount chargeable for the service by the service provider, both in money or money’s worth. “Services, including telecommunications, gaming, gambling, betting, and lotteries however described, provided in Nigeria shall be charged with duties of excise at the rates specified under the Tenth Schedule to this Act in a manner as may be prescribed by the Service.”
A detailed overview of the excise duty structure outlined in the bill reveals that telecommunications services, including both postpaid and prepaid offerings regulated by the Nigerian Communications Commission, will incur a five percent duty. This same rate will also be applicable to gaming, gambling, betting, and lottery services.
In addition, the legislation addresses currency exchange transactions involving the naira, specifying that these transactions must not exceed the prevailing official market rate set by the Central Bank of Nigeria (CBN). If the exchange rate for any transaction exceeds the official rate, the excess amount will be subject to excise duty, which will be assessed on a self-assessment basis in accordance with the Nigeria Tax Administration Act.
The new tax regime is a crucial aspect of the government’s strategy to increase non-oil revenue in light of ongoing fiscal pressures. Given the rapid growth in the telecommunications and betting sectors, authorities are seeking to expand the revenue base.
