The federal government, under President Bola Ahmed Tinubu’s administration, 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.
This proposal, which is contained in the “Nigeria Tax Act,” aims to impose excise duties on various services across the country.
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 obtained from the National Assembly and is dated October 4, 2024.
An analysis of the proposed legislation on Friday showed that it seeks to introduce excise duties on services such as telecoms, gaming, gambling, lotteries, and betting provided in Nigeria.
A section of the bill read, “The amount of an excisable transaction is the amount chargeable for the service by the service provider, both in money or money’s worth.
“Services, including telecommunications, gaming, gambling, betting, and lotteries however described, provided in Nigeria shall be charged with duties of excise at the rates specified under the Tenth Schedule to this Act in a manner as may be prescribed by the Service.”
A breakdown of the excise duty structure in the bill indicates that telecoms services, including postpaid and prepaid services regulated by the Nigerian Communications Commission (NCC), will attract a five per cent duty.
The same rate will apply to gaming, gambling, betting, and lottery services.
The bill also introduces guidelines on currency transactions, specifying that any difference between the prevailing Central Bank of Nigeria (CBN) exchange rate and the actual transaction rate will be subject to excise duty.
The bill states that any excess value in the exchange rates will be paid as excise duty under a self-assessment model.
It states, “Where an exchange of currency transaction involving the Naira is conducted within or outside Nigeria – (a) the transaction shall be conducted at an exchange rate not exceeding the prevailing exchange rate at the official market authorised by the Central Bank of Nigeria; and (b) where the exchange rate of the transaction exceeds the prevailing exchange rate at the official market authorised by the Central Bank of Nigeria, the excess shall be payable as excise duty by the seller on a self-assessment basis as provided in the Nigeria Tax Administration Act.”
This new tax regime is part of the government’s broader strategy to increase non-oil revenue amidst growing fiscal pressures. With the rapid expansion of Nigeria’s telecom and betting sectors, authorities see this bill as a way to widen the country’s revenue base.
By implementing excise duties on popular sectors, such as telecommunications and betting, the government aims to mitigate revenue challenges and improve the regulation of currency exchanges.