The Federal Government of Nigeria has introduced a bill proposing the imposition of a 5% excise duty on telecommunications, gaming, and betting services. This is part of a broader strategy to reform the country’s tax framework and boost non-oil revenue.
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 submitted to the National Assembly on October 4, 2024. It outlines a range of services that will be subject to this new excise duty.
Tax on Telecoms, Gaming, and Betting Services
The proposed excise duty would affect telecommunications services, including both prepaid and postpaid services, as regulated by the Nigerian Communications Commission. In addition, the excise tax will apply to gaming, betting, gambling, and lottery services across the country.
According to the bill, “Services, including telecommunications, gaming, gambling, betting, and lotteries however described, provided in Nigeria shall be charged with duties of excise.” This means that transactions related to these services will incur the 5% excise duty once the bill is passed into law.
Currency Transactions and Exchange Rate Regulation
The bill also seeks to regulate currency transactions by introducing excise duties on differences between official and market exchange rates. If the exchange rate used in a transaction exceeds the Central Bank of Nigeria’s official rate, the difference will be charged as excise duty under a self-assessment model.
The bill states, “Where an exchange of currency transaction involving the Naira is conducted within or outside Nigeria, any excess value in the exchange rate shall be payable as excise duty by the seller.”
Government’s Revenue Strategy
This proposal is part of the government’s efforts to diversify its revenue streams and address fiscal challenges. With the telecom and betting sectors expanding rapidly, the Federal Government aims to use these growing industries to widen the country’s tax base and enhance revenue collection.
If implemented, the bill will likely increase the cost of telecom services and gaming activities for consumers. However, the government is optimistic that the excise duty will improve revenue collection while also ensuring that currency transactions align more closely with the official rates set by the Central Bank of Nigeria.
The bill is currently under review in the National Assembly, and if passed, it will play a significant role in Nigeria’s ongoing efforts to reform its tax system.
