No pressure on call and data tariff as FG scraps 5% tax on telecom services

The Federal Government of Nigeria has scrapped the 5% excise duty on telecom services. The levy, which was initially suspended and now removed, is set to ease the pressure of voice and data service costs on over 170 million Nigerian subscribers. 

According to the Executive Vice-Chairman of the Nigerian Communications Commission (NCC), Dr Aminu Maida, the development will promote wider growth in the Nigerian telecom sector. This will help ease pressure on subscribers and boost economic activity and digital inclusion nationwide.

“Before it was suspended, but now the president has been magnanimous to remove it entirely. I was in a room when it was raised, and he said, No, no, no, we cannot put this on Nigerians. I was very pleased when the bills came out and we saw his words were followed through,” he said. 

The 5% excise duty is part of a broader tax reform initiative under a 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”

The 5% excise duty was first introduced in 2022 during President Muhammadu Buhari’s administration. After facing several backlashes from various stakeholders, it was suspended by President Bola Ahmed Tinubu in July 2023. The suspension was also followed by the import tax adjustment levy on certain vehicles, after concerns over its impact on consumers and the Nigerian economy.

On Sunday, October 20, 2024, the Federal Government announced a proposed 5% excise duty on telecommunications services, gaming, and betting activities as part of a new bill to overhaul Nigeria’s tax framework. Pressure groups like the National Association of Telecoms Subscribers (NATCOMS) and Association of Licensed Telecom Operators of Nigeria (ALTON) raised concerns about its economic effect.

Its implementation would have piled pressure on postpaid and prepaid services enjoyed by Nigerian telecom subscribers.

Also Read: 5% excise duty: Subscribers to petition National Assembly over tax on calls and internet.

What the removal truly means 

For emphasis, the 5% excise duty on telecom services has been removed since July 2023. What the new announcement does is scrap the proposed reintroduction in October 2024.

The removal means voice and data costs will remain at their current prices. It makes it a guaranteed case of no increase relating to tax. By effect, the tax removal is now a win for Nigerians. 

When subscribers recharge airtime or buy data, they get more value for their money. This means that voice calls and internet usage will be cheaper. This, in turn, increases the purchasing power and eases everyday cost pressures for families, students, and businesses that depend on their phones for various activities.

Effort to protect Nigerian telecom subscribers 

The NCC explained that several efforts are in place to make the industry transparent and protect consumers. The EVC, Maida noted that the regulator was now complementing traditional rule-based oversight with behavioural economics, especially through the disclosure of information that would allow consumers and operators to make better decisions.

According to him, one of the initiatives is to release independent data on download speeds, latency and other quality indicators starting in September. This means that subscribers will have data on the best network providers in the location.

“There will also be a quarterly network performance report based on user data. It extends accountability beyond mobile operators to also include infrastructure providers who play a critical role in reliability,” he added. 

The NCC EVC also noted that a joint NCC-CBN task force had developed a new operational framework to standardise recharge processes. This comes amid subscribers’ concerns about failed electronic top-ups. He explained that an expert-led team was tasked to investigate mobile operators’ billing systems amid complaints of data depletion.

He explained that the findings showed no technical glitch or systemic manipulation of consumer data. Whereas, factors such as background app usage, device settings and complex tariff structures contributed to consumer dissatisfaction and data depletion.

Maida also pointed to reforms that are evidence of the commission’s move to improve the Nigerian telecom industry. This includes the conclusion of the NIN-SIM audit, the settlement of USSD debt disputes, the transition to end-user billing and the launch of a Major Incident Reporting Portal.