The National Assembly (NASS) is advancing a proposal to reintroduce a 5% excise duty on telecommunications and betting services in Nigeria, despite a previous exemption granted by former President Muhammadu Buhari. This initiative aims to impose the excise duty across various sectors, including telecommunications, gaming, betting, and lottery activities nationwide.
The move to reinstate the excise duty comes in the wake of President Bola Tinubu’s executive orders on July 6, 2023, which temporarily suspended the 5% excise tax on telecommunications. The suspension was intended to alleviate the financial burden on both businesses and households in the country, particularly during challenging economic conditions.
The proposed reintroduction of the excise duty is encapsulated in an executive bill known as the “Nigeria Tax Bill 2024.” Key aspects of the bill include:
- Taxable Services: The bill specifies that services such as telecommunications, gaming, gambling, betting, and lotteries will be subject to excise duties. The rates for these duties are outlined in the Tenth Schedule of the Act.
- Tax Assessment: The taxable amount will be determined based on the charges levied by service providers, either in monetary terms or equivalent value. This means that the excise duty will apply to the services as provided, regardless of their form.
- Currency Exchange Transactions: The legislation includes provisions related to currency exchange transactions involving the naira. Transactions must not exceed the prevailing official market rate authorized by the Central Bank of Nigeria (CBN). Any amount exceeding this rate will be subject to excise duty, which will be assessed based on self-assessment methods in line with the Nigeria Tax Administration Act.
The reintroduction of the excise duty is likely to have several implications:
- Impact on Consumers: The excise duty may lead to increased costs for telecommunications and betting services, potentially affecting affordability for consumers.
- Revenue Generation: The government aims to bolster its revenue streams through this duty, which could assist in funding various developmental projects and initiatives.
- Business Environment: The move may impact the business landscape, particularly in the telecommunications sector, which had previously enjoyed a reprieve from this financial obligation. Companies may need to adjust their pricing strategies to accommodate the new tax.
As the National Assembly pushes for the reintroduction of the 5% excise duty on telecommunications and betting services, stakeholders across various sectors will be closely monitoring the developments. The outcomes of this legislative proposal will play a significant role in shaping the economic landscape in Nigeria, influencing both consumer behavior and the operational strategies of service providers.