KEY POINTS

• National assembly proposes reintroducing 5 percent duty on telecom, betting.
• Bill includes provisions for currency exchange regulations.
• Reintroduced excise duty aims to boost government revenue.

The National Assembly is proposing the reintroduction of a 5 percent excise duty on telecommunications, betting, and gaming services across Nigeria.

This move comes despite a previous exemption granted to the telecom sector by former President Muhammadu Buhari, which suspended the tax to ease financial pressure on businesses and households.

Scope of the proposed tax

The new plan is a component of the “Nigeria Tax Bill 2024,” which intends to reinstate excise taxes on a number of businesses, such as lotteries, gaming, telephony, and gambling.

According to the bill, service providers’ fees, whether expressed in cash or their comparable value, shall determine the taxable amount.

The legislation states that, “Services, including telecommunications, gaming, gambling, betting, and lotteries provided in Nigeria, shall be subject to excise duties at rates specified under the Tenth Schedule to this Act, in a manner prescribed by the Service.”

This wide breadth encompasses important industries and is anticipated to have a big impact on both service providers and customers.

Currency exchange regulations

In addition to the excise duties, the proposed legislation addresses currency exchange transactions involving the naira. Also, it mandates that transactions must not exceed the official market rate set by the Central Bank of Nigeria (CBN).

If the exchange rate used in any transaction surpasses the official rate, the excess amount will be subject to excise duty. The duty will be calculated based on a self-assessment system as outlined in the Nigeria Tax Administration Act.

According to Vanguard, this provision aims to tighten regulation over currency exchange activities and ensure that transactions align with official CBN policies.

The inclusion of exchange rate monitoring in the bill reflects a growing focus on managing Nigeria’s financial system and preventing abuse in the forex market.

Reactions and potential impact

Businesses and customers may be impacted by the reinstatement of the excise duty on betting and telecommunications services, with many likely to bear the financial burden.

President Bola Tinubu first suspended the duty in an attempt to ease the strain on businesses and households. This latest idea, however, marks a change in direction toward raising money through taxes on services that are in great demand.

Moreover, the National Assembly is pushing to reinstate the 5 percent duty as the administration looks for new sources of income to help with the nation’s financial difficulties.

It has not yet been thoroughly evaluated how it would affect the telecoms industry, which has grown quickly in recent years.