Senate endorses 5% excise duty
Telecommunications operators and consumer rights groups have strongly opposed the controversial 5% excise tax on telecom services reintroduced in the recently passed Nigeria Tax Bill 2024. The Senate passed the bill on May 8, 2025, reviving the excise tax first introduced in the Finance Act of 2020 during the administration of former President Muhammadu Buhari. […]
Telecommunications operators and consumer rights groups have strongly opposed the controversial 5% excise tax on telecom services reintroduced in the recently passed Nigeria Tax Bill 2024.
The Senate passed the bill on May 8, 2025, reviving the excise tax first introduced in the Finance Act of 2020 during the administration of former President Muhammadu Buhari.
President Bola Ahmed Tinubu had suspended the tax in July 2023, citing concerns that it could exacerbate inflation and hinder access to digital services, especially for low-income Nigerians.
The 2020 Finance Act had expanded the list of goods and services subject to excise duty, including telecom services.
However, the measure drew immediate and widespread criticism from telecom operators and consumer advocacy groups, who argued that the additional cost would burden citizens and increase the price of essential services in an already fragile economy.
The excise duty
Daily Trust reports that excise duty is a tax on certain goods produced or sold within a country and other activities as may be specified in the enabling law, including services.
As contained in the 2022 Finance Act, the tax is chargeable on all services regulated by the Nigerian Communications Commission (“NCC”) listed as postpaid and prepaid services at the rate of 5% for 2022, 2023 & 2024.
According to a report by PWC at the time, prior to the suspension of excise duty on certain goods in 2009, excise duty was applicable on recharge cards/vouchers.
The telecommunication companies are to pay the tax based on the excisable value of postpaid and prepaid services.
In July 2023, President Tinubu signed an Executive Order suspending the “5% Excise Tax on telecommunication services as well as the Excise Duties escalation on locally manufactured products.”
Dele Alake, who was then the Special Adviser to the President on Special Duties, Communications and Strategy, in a statement, explained that Tinubu also ordered the suspension of the Import Tax Adjustment levy on certain vehicles.
Concerns over return of excise duty on telecom services
Telecom operators have raised concerns that the proposed tax law would compel them to increase their tariffs, meaning subscribers would pay an additional 5% for data and voice services if the Tax Bill becomes law.
They argue this would place further financial strain on consumers and hinder Nigeria’s efforts to promote digital inclusion.
Although the Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Engr. Gbenga Adebayo was unavailable for comment when Daily Trust reached out. He had previously told an online publication that the 5% tax would further erode operators’ profits and limit their ability to invest in network infrastructure.
Adebayo, who also serves as the industry’s official spokesman, said telecom operators would not accept the proposed legislation.
Consumer rights groups, subscribers kick
Two telecom consumer rights groups – the National Association of Telecommunications Subscribers of Nigeria (NATCOMS) and the Association of Telephone, Cable TV, and Internet Subscribers (ATCIS) – strongly opposed the proposed tax law. They said it would further impoverish telecom users.
NATCOMS President, Chief Deolu Ogunbanjo, vowed that his group would resist the passage of the bill. “Allowing the Bill to stand is an injustice to both Nigerian telecom subscribers and operators,” he said.
Similarly, ATCIS President Sina Ilesanmi questioned why lawmakers failed to consult industry stakeholders before reintroducing the controversial tax.
“My advice to the government is that there should be collaboration, and they should ensure public participation. They should engage citizens rather than adopt a closed-door or secretive approach,” he said.
In separate interviews with Daily Trust, several telecom subscribers strongly rejected the proposed tax, describing it as an added burden in already difficult economic conditions.
Joy Esonwunne expressed dismay over the proposed levy, arguing that the government should focus on meeting public expectations rather than discouraging them with new financial pressures.
“It’s disheartening that the government keeps pushing us to the brink. We’re already at our lowest point. Instead of raising the bar, they keep lowering it,” she said.
She added that the recent hike had doubled her monthly data expenses-from N10,000 last year to N20,000 this year.
Paul Oyewusi, Managing Director of POMA Point Limited, said many businesses rely on data to function and are still reeling from the 50% tariff hike. He warned that the additional 5% tax would further cripple business operations.
“The 50% increase is already shrinking businesses, especially those operating remotely. Many companies have had to double data allowances for their staff. Someone who used to get N50,000 now receives N100,000 for data. Overhead costs are rising.
“We are still grappling with fuel and electricity costs. Adding a 5% tax is too much. Consumers will inevitably carry the burden,” he said.
Oyewusi urged lawmakers to understand the reality on the ground and craft policies that alleviate hardship rather than worsen it.
When contacted for comment, Nnenna Ukoha, Head of Public Affairs at the Nigerian Communications Commission (NCC), told Daily Trust she would respond later. However, as of the time of filing this report, she had not done so.
In an earlier statement to an online publication, Ukoha disclosed that the NCC had not yet received the official version of the bill for review.
We pay 54 different taxes – Telcos
As of August 2024, telecommunications operators reported paying 54 different taxes, according to the Association of Licensed Telecommunications Operators of Nigeria (ALTON).
They warned that with the sector just beginning to recover from currency devaluation and rising operational costs, reintroducing the 5% excise duty would stifle recovery efforts and hamper digital inclusion.
“We have had no clarity on how the 5% tax would be implemented, but the burden will fall on the consumer. Telecoms should be treated as a social good, not taxed like luxury items. No country that takes infrastructure seriously taxes telecoms this way,” ALTON Chairman, Gbenga Adebayo, told an online newspaper.
Other industry stakeholders argue that excise taxes are typically applied to luxury or harmful goods, such as designer watches, luxury cars, alcohol, and tobacco, whose consumption governments might want to discourage. Internet access, they contend, does not belong in that category.
An excise duty is a specific type of tax imposed on certain goods or services at the time of purchase. The Nigerian Tax Bill describes excisable transactions as: (a) provision of the service physically in Nigeria, or (b) consumption of the service remotely or virtually in Nigeria.
This means both domestic and international service providers offering telecom services in Nigeria would be liable to collect and remit the 5% tax, passing the cost on to consumers.
“There’s no wiggle room for operators to absorb this cost. Operators are already working with a tariff increase that’s inadequate. The new tax will squeeze profit margins and hit consumers the hardest,” said Anthony Emoekpere, President of the Association of Telecommunications Companies of Nigeria (ATCON).
“Someone recharging N1,000 will feel this 5% tax the most. It also adds an extra compliance burden on operators, who are now required to collect and remit the tax,” said ALTON’s Adebayo.
Industry players argue that short-term revenue generation shouldn’t come at the expense of long-term growth.
Lawsuit against proposed telecom tax bill set for June 11
The National Association of Telecommunications Subscribers (NATCOMS) has filed a lawsuit against the federal government over the proposed reintroduction of the 5% telecom tax.
The case is scheduled to be heard at the Federal High Court in Lagos on June 11.
Justice Aluko of Court 7 will preside over the matter. The court ruling may determine whether the federal government proceeds with the tax’s implementation after presidential assent.