The federal government’s plan to reintroduce excise duty on telecommunication services will see consumers paying more for calls.
The government is increasing the consumption tax on telecom services to 12.5 percent from the current 7.5 percent value-added tax. This move is part of a broader tax reform initiative detailed in a bill entitled, ‘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.’
The proposed bill seeks to unify fiscal legislation governing taxation in the country. It seeks to introduce excise duties on telecoms, gaming, gambling, lotteries, and betting services.
“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 bill read.
The bill explained that the “amount of an excisable transaction is the amount chargeable for the service by the service provider, both in money or money’s worth.”
Industry players say the tax will not only hurt consumers but will also stifle telecom firms.
“This tax is going to hurt the telecom industry and subscribers alike,” said Adeolu Ogunbanjo, president of the National Association of Telecoms Subscribers. “They are essentially trying to kill the industry by imposing more burdens on it.”
The reintroduction of the excise duty comes despite a 2023 executive order suspending the implementation of a five percent excise duty on telecom services. This tax has been contentious since it was first proposed in 2022, with telecom operators indicating they would pass the cost on to consumers.
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