The Federal Government of Nigeria has formally abolished the 5% excise duty on telecommunications companies, a tax that was introduced during the administration of former President Muhammadu Buhari. This levy applied to both voice calls and data services.
The announcement regarding the removal of the 5% tax on telecommunications was disseminated by the National Orientation Agency (NOA) through a statement on their official X account on Thursday, September 11, 2025. This decision, which has been directed by President Bola Tinubu, seeks to alleviate the financial burden on subscribers in light of escalating living costs and recent tariff increases within the sector.
In response to this development, the Executive Vice Chairman of the Nigerian Communications Commission (NCC), Aminu Maida, confirmed that the removal of the excise duty was ordered by President Bola Tinubu during deliberations concerning the recently enacted Finance Act.
This abolition ensures the tax will not be reimposed, providing long-term certainty for the sector. It aligns with the Tinubu administration's broader tax reform agenda, which seeks to balance revenue generation with pro-consumer policies, including adjustments to other levies like import duties on vehicles. "This constitutes a clear indication that the government is attuned to the concerns of Nigerian citizens and is committed to enhancing the affordability of communication services," stated Maida.
Background and Introduction of 5% excise Tax
The 5% excise duty was first introduced in July 2022 under the administration of former President Muhammadu Buhari as part of broader efforts to expand the government's revenue base through the Finance Act. This levy was intended to apply to all telecom services, including phone calls, SMS, and internet data, potentially adding to the operational costs passed on to consumers by telecom operators like MTN, Airtel, and Globacom.
From the outset, the tax faced fierce opposition from industry stakeholders, consumer advocacy groups, and telecom associations such as the Association of Licensed Telecom Operators of Nigeria (ALTON) and the National Association of Telecoms Subscribers (NATCOMS). Critics argued that it would exacerbate affordability issues in a country where digital access is already strained, especially for low-income users.
The tax was initially suspended in July 2023 following public outcry and legal challenges, but discussions around its potential reintroduction resurfaced in late 2024 as part of proposed tax reforms under a bill titled "A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation." This uncertainty compounded consumer anxiety, particularly after the Nigerian Communications Commission (NCC) approved a 50% tariff increase on calls and data earlier in 2025, citing the need to address inflation and infrastructure investments.
Implications for Consumers and the Telecom Sector
With over 171 million active telecom subscribers in Nigeria—making it one of Africa's largest mobile markets—this decision is poised to deliver immediate relief. Subscribers can expect lower effective costs for calls and data bundles, as operators are no longer required to collect and remit the 5% duty. This comes at a crucial time, as many Nigerians have been grappling with the earlier tariff hikes and economic pressures from inflation.
For telecom companies, the scrapping reduces compliance burdens and operational costs, potentially freeing up resources for network expansions and service improvements. However, industry leaders like Gbenga Adebayo of ALTON have cautioned vigilance, urging stakeholders to monitor for any "hidden levies" that might emerge under different guises. On the positive side, NATCOMS President Deolu Ogunbanjo described the move as "a step in the right direction," praising its role in fostering growth and accessibility in the digital economy.
The NCC has tied this reform to ongoing initiatives, such as stricter service quality benchmarks and centralized billing systems for greater transparency. Overall, the policy shift signals a government pivot toward supporting digital access, which is vital for education, business, and remote work in Nigeria's increasingly connected society.
This development marks a rare win for consumers in a sector often dominated by price pressures, underscoring the impact of public advocacy in shaping policy. As implementation rolls out, it remains to be seen how quickly the benefits will reflect in airtime and data pricing.
Post a Comment