The Nigerian government is making strides to increase revenue by proposing a bill that introduces a 5% excise duty on telecommunications, gaming, and betting services. This measure is part of the broader “Nigeria Tax Act,” which aims to consolidate and update the country’s tax framework. The bill, introduced in October 2024, targets various sectors to generate income and streamline financial transactions.
The excise duty will apply to both prepaid and postpaid telecom services regulated by the Nigerian Communications Commission (NCC), as well as gaming, gambling, lotteries, and betting services, which have seen significant growth in recent years. The bill specifies that all transactions within these sectors will be subject to the 5% excise duty, which could lead to increased costs for consumers across the nation.
The proposed bill also aims to regulate currency transactions, introducing a mechanism where any disparity between the Central Bank of Nigeria’s (CBN) official exchange rate and the actual transaction rate would incur an excise duty liability. This is part of an effort to control currency speculation and ensure financial stability.
Exploring non-oil revenue sources and its impacts
As Nigeria continues to experience fluctuating oil revenues, the government is expanding its non-oil revenue sources, focusing on sectors like telecommunications and betting that have demonstrated rapid growth. The telecom sector, in particular, has seen substantial expansion, with millions of Nigerians relying on mobile networks for communication and internet access. Betting and gaming services have also grown, with reports indicating that around 60 million Nigerians participate in sports betting, generating significant industry revenue.
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While the excise duty is intended to boost government revenue, concerns have emerged about its impact on consumers. Telecom services are critical for communication and daily activities, and price hikes could place additional financial burdens on citizens. Similarly, additional taxes on betting and gaming services could affect companies’ revenues and lead to potential job losses in the sector. Despite these concerns, the government believes the revenue generated will help stabilize the economy and address budgetary constraints.
