THE Federal Government has proposed a five per cent excise duty on telecommunications services, gaming, and betting activities.
However, it exempted baby products and locally manufactured sanitary towels from tax as part of a new bill seeking to overhaul Nigeria’s tax framework.
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 the Taxation of Income, Transactions, and Instruments, and Related Matters,” is dated October 4, 2024.
An analysis of the proposed legislation conducted on Friday, October 18, revealed that it aimed to implement excise duties on services including telecommunications, gaming, gambling, lotteries, and betting 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.”
According to the breakdown of the excise duty structure outlined in the bill, telecommunications services, including postpaid and prepaid services regulated by the Nigerian Communications Commission, will be subject to a five per cent duty. The same rate will apply to gaming, gambling, betting, and lottery services.
“The following supplies are exempt from the value added tax imposed under chapter six of this Act -oil and gas exports; crude petroleum oil and feed gas; goods purchased for use in humanitarian donor-funded projects provided that the humanitarian donor shall first pay the VAT and request a refund from the service.
Baby products: locally manufactured sanitary towels, pads or tampons; military hardware, arms, ammunitions and locally manufactured uniforms supplied to armed forces, para-military and other security agencies of a Nigerian government.” The bill read in part
The bill also established guidelines for currency transactions, indicating that any variance between the current Central Bank of Nigeria exchange rate and the actual transaction rate would incur an excise duty.
The new tax framework is part of the government’s plan to increase non-oil revenue amid fiscal challenges.
Given the rapid expansion in the telecoms and betting sectors, authorities are seeking to broaden the revenue base.
Furthermore, the bill aims to ensure that currency exchanges conform to the official CBN rates, with any surplus charged as excise duty under a self-assessment model.
The ICIR reported that stakeholders had observed a lack of clarity in the VAT reforms proposal, resulting in a lack of information that Nigerians could engage with, since no policy document could be referenced for public engagement.
Fatimah Quadri is a Journalist and a Fact-checker at The ICIR. She has written news articles, fact-checks, explainers, and media literacy in an effort to combat information disorder.
She can be reached at sunmibola_q on X or fquadri@icirnigeria.org