President Bola Tinubu has directed the removal of the 5 percent excise duty on telecommunications voice and data services. The excise duty tax was introduced under the 2020 Finance Act and had been widely condemned for increasing the cost of mobile and internet services in Nigeria.
The Nigerian Communications Commission confirmed the direction to abolish the excise duty. The commission stated that the removal is part of government efforts to assist citizens facing financial pressure as a result of ongoing inflation. With over 171.3 million Nigerians using telecom services, the removal should have a substantial impact on households and businesses.
Telecom operators had voiced their concerns on several occasions that the tax burdens on the telecom sector exceed tax levels imposed in other sub-Saharan African countries. They also warned that excise duty would act as a barrier to investment, increased tariffs, and the slowing of digital development. Both the Consumer Rights Association and other industry stakeholders opposed the excise duty, claiming that it would have a significant negative impact on growth and was grossly unfair to users.
Overall, government objectives should include making voice and data services more affordable and consumer friendly, as well as promoting the digital economy. According to the NCC, the policy change will encourage efficiency innovation, increase sector competition, and lower overall telecom costs for customers.
The development has received support from industry players and is viewed as a move that will not only lower tariffs but will also create a more appealing environment for investment and infrastructure development. However, operators are waiting for regulatory clarity from the NCC on the implementation guidance to determine how the removal will affect billing systems and existing data plans.
Analysts viewed the decision as a reflection of government responsiveness to public concerns and commitment to ease the cost of living challenge. The removal of the tax should also signify a stronger commitment to drive digital inclusion in Nigeria going forward as literacy, economic growth and government effectiveness all depend on broadband digital communication.
While the removal of the excise duty represents hope for many millions of Nigerians who use and rely on mobile phones and internet services on a daily basis, it is unclear whether this will result in immediate tariff reductions. However, the timing of the government’s policy implementation and industry’s understanding of both formal and informal tariff approvals will most likely determine this.
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