Despite the current economic hardship, telecommunications consumers may need to tighten their belts in the days ahead, as the Federal Government plans to impose 5% excise duty on all telecommunications services ranging from calls, SMS to data services.
However, as an expansion of the plans, gaming, gambling, betting, and lotteries activities will be part of a new bill to overhaul Nigeria’s tax framework.
According to reports, the bill, titled: “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters,” was dated October 4, 2024, and obtained from the National Assembly.
An analysis of the proposed legislation on Friday showed that it seeks to introduce excise duties on services such as telecoms, gaming, gambling, lotteries, and betting provided in Nigeria.
A section of the bill read: “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 breakdown of the excise duty structure in the bill indicates that telecoms services, including postpaid and prepaid services regulated by the Nigerian Communications Commission, will attract a five per cent duty.
The same rate will apply to gaming, gambling, betting, and lottery services.
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The bill also introduces guidelines on currency transactions, specifying that any difference between the prevailing Central Bank of Nigeria exchange rate and the actual transaction rate will be subject to excise duty.
The new tax regime forms part of the government’s strategy to boost non-oil revenue amidst fiscal pressures.
With rapid growth in the telecoms and betting sectors, authorities are looking to widen the revenue base.
The bill also aims to ensure that currency exchanges align with official CBN rates, with any excess payable as excise duty under a self-assessment model.
In September 2022, the former Minister of Communications and Digital Economy, Isa Pantami, announced the suspension of the proposed 5% exercise duties on telecommunication services during the inaugural meeting of the Presidential Committee on Excise Duty for the Digital Economy Sector in Abuja.
Pantami explained that the telecommunications sector is already overtaxed with multiple taxation, thus directing that a committee to be constituted to look into the matter carefully and advise him carefully.
It will be recalled that the ministry of Finance and the Nigerian Customs Service had at a stakeholders’ engagement announced plans that it would commence the implementation of its proposed 5% exercise duties on telecommunication services and beverages in 2023.
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