Taxing times ahead

Nigeria’s government has proposed a five percent excise duty on telecommunications services, gaming, and betting activities as part of a…

Nigeria’s government has proposed a five percent excise duty on telecommunications services, gaming, and betting activities as part of a new bill to overhaul Nigeria’s tax framework. The Punch newspaper reported that a breakdown of the bill’s excise duty structure indicates that telecoms services, including postpaid and prepaid services regulated by the Nigerian Communications Commission, will attract the duty. The bill also introduces guidelines for currency transactions, stating that any difference between the Central Bank of Nigeria’s exchange rate and the actual transaction rate will incur excise duty.

As of 2023, Nigeria’s tax-to-GDP rate was estimated at 9.4%, a decline from the 10.9% reported in 2021. Key issues include the uncoordinated activities of tax authorities and citizens’ unwillingness to pay taxes due to suspicions about the government’s use of tax proceeds. We hope that the proposed overhaul of Nigeria’s tax framework will lead to better coordination and transparency on the part of the government. We must warn that the new tariffs may further squeeze telecom operators, which could lead to reduced investment in the networks. The government must be mindful that the perception of a hostile business environment will potentially result in a decline in service quality and put the industry’s long-term viability at risk. Nigeria can ill afford less efficient networks, and the government must ensure that telecom service providers are not further burdened.