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Wednesday, November 6, 2024

Nigeria to Impose 5% Excise Duty on Telecoms and Betting under New Tax Reform Bill

Government targets booming sectors as part of broader strategy to boost non-oil revenue

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The Nigerian government has proposed a five per cent excise duty on telecommunications services, gaming, and betting activities, according to a new bill aimed at overhauling the country’s tax framework. The legislation, 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.

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Analysis of the bill reveals plans to introduce excise duties on services such as telecoms, gambling, lotteries, and betting. A section of the bill reads: “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 provided in Nigeria shall be charged with duties of excise at the rates specified under the Tenth Schedule to this Act.”

Under the proposed legislation, telecom services, including both postpaid and prepaid services regulated by the Nigerian Communications Commission, will be subject to a five per cent excise duty. The same rate will apply to gaming, gambling, betting, and lottery services.

The bill also introduces excise duties on currency transactions, stipulating that any discrepancies between the Central Bank of Nigeria’s official exchange rate and the actual transaction rate will attract an excise duty under a self-assessment model. This provision aims to align currency exchanges with official CBN rates and capture additional revenue.

As part of efforts to diversify Nigeria’s revenue streams beyond oil, the government sees the booming telecommunications and betting sectors as critical areas for expanding its tax base. The proposed excise duties reflect a broader strategy to shore up non-oil revenue as the country grapples with fiscal pressures.

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