The Federal Government has officially scrapped the 5% excise duty on telecommunications services. This policy shift is expected to bring immediate relief to millions of Nigerian mobile and data users who have been grappling with higher service costs.
Tinubu Directs Tax Removal
Executive Vice Chairman of the Nigerian Communications Commission (NCC), Aminu Maida, confirmed that President Bola Tinubu ordered the removal of the levy during discussions on the Finance Act.
“President Tinubu directed the removal of the 5% excise duty on telecommunications services,” Maida announced, calling it a step toward reducing financial pressure on over 171 million active telecom users across the country.
This move comes after several months of rising tariffs and growing concerns that telecom costs were becoming unaffordable for many households.
History of the 5% Excise Tax
The tax was first introduced in 2022 under the Buhari administration as part of an effort to boost non-oil revenue. It applied to both voice and data services, with telecom operators directed to remit payments monthly.
At the time, officials justified the measure as a way to close Nigeria’s widening revenue gap. However, industry players strongly opposed the move, warning that it would increase the financial burden on subscribers already dealing with inflation and higher living costs.
Industry Pushback
Telecom operators, through the Association of Licensed Telecom Operators of Nigeria (ALTON), explained that the sector was already weighed down by over 39 separate taxes. They also pay a 7.5% VAT and contribute 2% of their annual revenue to the NCC.
With rising diesel costs for powering base stations and high import expenses for equipment, operators argued they could not absorb the tax. The extra levy raised the effective tax burden on telecom services to 12.5%, forcing providers to pass the cost on to subscribers.
Impact on Subscribers
Nigerians began to feel the pressure earlier this year when NCC approved a 50% increase in telecom tariffs. Operators had initially pushed for a 100% increase, citing inflation, rising fuel prices, and foreign exchange challenges.
The hike significantly raised data and voice service costs. MTN’s 1.8GB plan jumped from N1,000 to N1,500, while a 20GB plan increased from N5,500 to N7,500. SMS rates also rose from N4 to N6.
For many households, these changes meant cutting back on data usage or opting for cheaper, smaller plans. What used to be a predictable expense quickly became a source of financial strain, especially for students and low-income users.
What This Means for Consumers
The removal of the 5% excise tax signals a major win for subscribers and the telecom industry. Lowering the tax burden could slow further tariff increases and help operators maintain service quality without overburdening consumers.
Industry experts believe the move will also encourage higher data consumption, benefiting businesses and the digital economy.
