Nigeria Proposes 5% Tax on iGaming and Telecommunications Services

23.10.2024

The Nigerian government is planning to introduce a 5% tax on telecom, gaming, and betting services. This change is part of an effort to revamp the tax system, but it could hit consumers and shake up the iGaming industry.

Will Nigeria’s Gambling Industry Face a New 5% Tax?

Amid ongoing economic challenges, the Federal Government has submitted the Economic Stabilization Bills to the National Assembly. These bills are part of a broader effort to stabilize the economy by increasing government revenue through new taxation measures.

The proposed legislation seeks to impose excise duties on services provided within Nigeria, specifically targeting telecommunications, gaming, gambling, lotteries, and betting. As stated in the bill: “Services, including telecommunications, gaming, gambling, betting and lotteries however described, provided in Nigeria shall be charged with duties of excise at the rates specified under the Tenth Schedule to this Act in a manner as may be prescribed by the Service.”

Impact on Consumers and the iGaming Industry

If enacted, the new tax would result in higher costs for Nigerians using these services. Consumers might experience increased charges for mobile communication and participation in gaming and betting activities. This could affect the growth and profitability of the iGaming sector in Nigeria.

In September 2024, the Federal Executive Council approved the bill following recommendations from the Presidential Committee on Fiscal Policy and Tax Reforms. This approval signifies the government’s commitment to implementing these new tax measures as part of its economic reform agenda.

The bill also includes a plan to impose a 25% tax on individuals earning above ₦1.5 million in salaries. This indicates a comprehensive approach by the government to broaden its tax base and increase revenue from both services and higher-income earners.

New Regulations Set to Take Effect in 2025

The proposed taxes are slated to come into effect in 2025, pending approval from the National Assembly. The legislative process will determine the final details and the implementation timeline of these measures.

This proposal marks a shift from the previous stance in May 2023, when the former Minister of Communications and Digital Economy, Isa Pantami, announced an exemption of the telecommunications sector from such taxes. The new bill indicates a change in government policy regarding taxation in the telecom and iGaming industries.