The Federal Government has scrapped the 5% excise duty
earlier imposed on telecommunications services, in a policy reversal aimed at
easing cost pressures for millions of Nigerian subscribers.
The Executive Vice Chairman of the Nigerian
Communications Commission (NCC), Aminu Maida, confirmed the development, noting
that President Bola Tinubu directed the removal of the levy during
deliberations on the Finance Act.
“President Tinubu directed the removal of the 5%
excise duty on telecommunications services,” Maida said. The move is expected
to bring relief to Nigeria’s over 171 million active telecom users, who have
already been hit by a 50% tariff increase implemented in January 2025.
Background
The telecom excise tax was introduced in 2022 under the Buhari administration
as part of efforts to grow non-oil revenues. Covering both voice and data
services, it was widely criticized by operators and consumer advocates, who
argued that it placed an additional burden on an industry already facing steep
costs.
Operators pointed to more than 39 separate taxes, a
7.5% VAT, and mandatory regulatory levies, alongside high energy and forex
costs. The Association of Licensed Telecom Operators of Nigeria (ALTON) warned
that the duty would inevitably be passed on to consumers, pushing the effective
tax burden on telecom services to about 12.5%.
Tariff Hikes and Consumer Impact
In January 2025, NCC approved a 50% increase in telecom tariffs—half of the
100% hike operators had requested—citing inflation, rising diesel costs, forex
shortages, and import expenses for telecom equipment.
As a result, data prices spiked. MTN’s 1.8GB monthly
plan rose from N1,000 to N1,500, while a 20GB plan jumped from N5,500 to
N7,500. SMS rates also climbed from N4 to N6 per message. The average cost of
1GB of data rose from around N287 to N431, depending on the provider.
For many households, the increase has strained
budgets, forcing users to cut back on data usage or downgrade to cheaper plans.
Why it Matters
The removal of the excise duty offers some relief but does not roll back the
January tariff hike, meaning telecom services remain costlier than before.
Nonetheless, industry experts say the decision signals government recognition
of the sector’s importance as an enabler of economic activity, especially in a
high-cost environment.
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