Federal Government proposes 5% tax on telecommunications services and more

The Federal Government has proposed a five percent excise duty on telecommunications services, gaming, and betting activities as part of a new initiative to reform Nigeria’s tax framework.

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 is sourced from the National Assembly.

An analysis of the proposed legislation on Friday revealed that it aims to introduce excise duties on services such as telecommunications, gaming, gambling, lotteries, and betting offered in Nigeria.

According to the bill, “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.”

The proposed excise duty structure indicates that telecom services, both postpaid and prepaid, regulated by the Nigerian Communications Commission, will incur a five percent duty. The same rate will apply to gaming, gambling, betting, and lottery services.

Additionally, the bill introduces guidelines for 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.

This new tax regime is part of the government’s strategy to increase non-oil revenue amid fiscal pressures. With rapid growth in the telecommunications and betting sectors, authorities aim to broaden the revenue base. The bill also seeks to ensure that currency exchanges align with official CBN rates, with any excess payable as excise duty under a self-assessment model.