The Federal Government has abolished the 5% excise duty previously imposed on telecommunications services, a policy reversal that officials say will ease cost pressures on millions of Nigerians.
The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Aminu Maida, confirmed the development, saying the directive came directly from the presidency.
“President Tinubu directed the removal of the 5% excise duty on telecommunications services,” Maida said, noting the decision was reached during discussions around the Finance Act.
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The withdrawal is expected to provide immediate respite to more than 171 million active telecom subscribers, many of whom have been grappling with a 50% tariff increase approved earlier this year.
The Telecom Levy’s Troubled History
The excise duty was first introduced in 2022 under former President Muhammadu Buhari as part of a strategy to expand non-oil revenues. It applied to both voice and data services, with operators mandated to remit monthly collections. The policy was justified on grounds of Nigeria’s fiscal gap and the need to widen the tax base beyond oil.
But from the outset, it was unpopular. The Association of Licensed Telecom Operators of Nigeria (ALTON) argued that the new levy piled onto a sector already struggling under 39 separate taxes, a 7.5% VAT, and a 2% contribution of annual revenue to the NCC.
Operators also faced rising diesel costs to power base stations, given unreliable electricity supply. Unable to absorb the added tax, they passed it directly to subscribers, raising the total tax burden on telecom services to roughly 12.5%. Critics said the measure was unsustainable and harmful to consumers already battling high living costs.
The scrapping of the levy comes after the NCC approved a 50% increase in telecom tariffs effective January 2025. Operators had lobbied for as much as a 100% rise, citing inflation, foreign exchange shortages, and higher import costs for equipment, but the regulator settled on a halfway adjustment.
The new tariff regime reshaped household telecom spending.
- MTN’s 1.8GB plan jumped from N1,000 to N1,500.
- A 20GB plan rose from N5,500 to N7,500.
- SMS rates increased from N4 to N6.
The average cost of 1GB of data climbed from N287 to about N431 in advertised price ranges, with some operators listing even higher. The result has been growing strain on lower-income households, many of which are scaling back data use, opting for cheaper bundles, or limiting app consumption to essential services.
Clearing the Way for Petroleum Tax
While the telecom tax rollback has been welcomed by subscribers, many believe it is part of a broader fiscal balancing act. The government is believed to be clearing space to soften resistance ahead of a more consequential tax on fuel.
Under the Tax Act 2025, Nigerians will begin paying a 5% fossil fuel tax on petrol and diesel from 2026. The levy is not entirely new, but rather a reinstatement of a provision first introduced under the Federal Roads Maintenance Agency (Amendment) Act of 2007.
The Presidential Fiscal Policy and Tax Reforms Committee has said the measure was included in the new tax framework for “harmonization and transparency.” Still, analysts warn that because fuel touches nearly every sector of the economy, the petroleum tax will have far greater knock-on effects than the now-scrapped telecom duty.
Energy costs already make up a significant share of expenses for businesses, from logistics firms to small traders, while households are still adjusting to last year’s subsidy removal. Economists note that even at 5%, the fossil fuel levy could ripple across supply chains, raising prices of transport, goods, and services more sharply than any telecom tariff adjustment.
While the scrapping of the telecom levy provides relief to subscribers, calming tensions between operators and regulators for now, it may prove a short-lived victory for consumers. The introduction of the petroleum tax in 2026 threatens to intensify financial pressures across the board, with its reach extending well beyond mobile data and voice bills.