FG proposes 5% excise duty on telecom, gaming, betting services

• The Federal Government proposes a 5% excise duty on telecommunications, gaming, and betting services
• The bill was submitted to the National Assembly on October 4, 2024, as part of broader efforts to reform Nigeria's tax system
• The bill aims to consolidate legal frameworks on taxation and introduce excise duties on services regulated by the Nigerian Communications Commission

The Federal Government has introduced a new bill proposing a 5% excise duty on telecommunications, gaming, and betting services as part of a broader effort to overhaul the nation’s tax framework.

This proposal, contained in the “Nigeria Tax Act,” aims to impose excise duties on various services nationwide.

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 obtained from the National Assembly and is dated October 4, 2024. 

Under the bill's provisions, the government will impose a 5% excise duty on postpaid and prepaid telecommunications services regulated by the Nigerian Communications Commission. This duty will also apply to gaming, gambling, lotteries, and betting activities in Nigeria.

According to the document, “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.” 

This means all transactions linked to these services will attract the excise duty once the bill is enacted.

Additionally, the bill seeks to regulate currency transactions by specifying that any differences between the official Central Bank of Nigeria (CBN) exchange rate and the actual transaction rate will attract excise duties.

The bill states that any excess value in the exchange rates will be paid as excise duty under a self-assessment model.

It states, “Where an exchange of currency transaction involving the Naira is conducted within or outside Nigeria – (a) the transaction shall be conducted at an exchange rate not exceeding the prevailing exchange rate at the official market authorised by the Central Bank of Nigeria; and (b) where the exchange rate of the transaction exceeds the prevailing exchange rate at the official market authorised by the Central Bank of Nigeria, the excess shall be payable as excise duty by the seller on a self-assessment basis as provided in the Nigeria Tax Administration Act.” 

This new tax regime is part of the government’s broader strategy to increase non-oil revenue amidst growing fiscal pressures. With the rapid expansion of Nigeria’s telecom and betting sectors, authorities see this bill as a way to widen the country’s revenue base.

By implementing excise duties on popular sectors, such as telecommunications and betting, the government aims to mitigate revenue challenges and improve the regulation of currency exchanges.

If passed, the new bill will significantly impact the cost of telecom services and betting activities, as they will be subject to excise duties. The government is optimistic that the legislation will help boost revenue collection while aligning currency exchange practices with official CBN rates.

7 tax reforms by Tinubu administration that affect every Nigerian

Meanwhile, TheRadar earlier reported that the Bola Tinubu administration in Nigeria had since 2023 embarked on a transformative journey to overhaul the country's tax regime. 

The administration's tax reforms included the suspension of the 5% Excise Tax on telecommunication services, suspension of excise duties escalation on locally manufactured products, suspension of the green tax on single-use plastics, suspension of the Import Adjustment Tax (IAT) on certain vehicles, deferment of tax commencement dates, zero tariffs, excise duties and value-added tax (VAT) on imported pharmaceutical inputs, and suspension of duties, tariffs, and taxes on some essential food items. 

With a focus on simplifying and harmonising tax policies, these reforms aim to alleviate the tax burden on businesses and individuals, promote economic growth, and create a more business-friendly environment.