The Federal Government is proposing a 5% excise duty on telecommunications services, gaming, and betting activities as part of a comprehensive new tax bill aimed at overhauling Nigeria’s tax system.
The PUNCH reported that 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 dated October 4, 2024, and made available by the National Assembly.
An in-depth analysis of this bill, which surfaced on Friday, reveals that it seeks to impose excise duties on services like telecoms, gambling, gaming, lotteries, and betting, all of which are growing industries in Nigeria.
These new taxes aim to capture revenue from sectors where consumer spending continues to rise.
In one section of the bill, it clearly stated, “The amount of an excisable transaction is the amount chargeable for the service by the service provider, both in money or money’s worth.”
This provision covers a wide range of services, further detailed by another segment which specifies, “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 closer look at the bill shows that the 5% excise duty will apply to both postpaid and prepaid telecom services, as regulated by the Nigerian Communications Commission.
The same rate will extend to other entertainment and leisure activities, such as gaming, betting, lotteries, and gambling services.
Beyond just telecoms and betting, the bill introduces new guidelines for currency transactions.
It stipulates that any difference between the Central Bank of Nigeria exchange rate and the actual transaction rate will be subject to excise duty.
This is part of a broader effort to tighten oversight on currency dealings, ensuring they are in line with official CBN rates.
Under this regime, any such discrepancies in exchange rates must be paid through a self-assessment model.
This initiative is part of the government’s larger fiscal strategy to boost non-oil revenue amidst economic pressures.
With the telecoms and betting industries expanding rapidly, this tax proposal seeks to widen Nigeria’s revenue base by capitalizing on growth sectors outside of traditional oil revenues.
The bill aims to help the government navigate fiscal challenges by tapping into alternative sources of income, while ensuring greater regulatory alignment in financial transactions.
