The announcement of the proposed addition of a 5% tax on telecommunications services, gaming, betting and lottery activities in Nigeria by the National Assembly has elicited mixed reactions from the public and the business sector. The move, although controversial, is aimed at increasing government tax revenue and strengthening regulation of the affected industries.
At the time of the signing of the four executive orders by President Bola Tinubu in July 2023, an exemption from the 5% tax on telecommunications services was put in place to mitigate the negative economic impact on businesses and households. However, the current proposal to reintroduce the tax has rekindled debate over its potential impact.
According to the bill titled ‘Nigeria Revenue Bill 2024’, telecommunications services, gaming, betting and lottery will attract excise duty. The amount of the taxable transaction will be based on the cost charged by the service provider, whether in monetary terms or in equivalent value.
In addition, the bill includes provisions for foreign exchange transactions involving the naira. It is stipulated that such transactions shall not exceed the official exchange rate authorized by the Central Bank of Nigeria. Any excess over this rate will be subject to excise duty payable by the seller, assessed on a self-assessment basis in accordance with the Nigerian Revenue Service Act.
The proposal raises concerns about its impact on the cost of telecommunications services to consumers, as well as the economic viability of businesses operating in the sector. Proponents of the tax argue that it will boost government revenue and help combat tax evasion, while opponents fear that it will increase the tax burden on businesses and negatively impact market competitiveness.
It will be interesting to follow the evolution of this bill and the resulting debates in the National Assembly. The decisions taken will have major implications for the telecommunications industry and related sectors in Nigeria, and could shape the country’s business and fiscal environment in the years to come.