The Nigerian government may reinstate a previously suspended telecom tax and other fiscal measures to secure a $750 million loan from the World Bank. According to the Stakeholder Engagement Plan for the Nigeria-World Bank ARMOR program (March 2024), the government plans to reintroduce excises on telecom services and an EMT levy on electronic money transfers through the Nigerian Banking System, among other taxes.
This move comes after President Bola Tinubu suspended the 5% excise duty on telecommunications and the Import Tax Adjustment levy on certain vehicles in July 2023.
The World Bank loan aims to strengthen the government’s financial position by enhancing its capacity to manage and mobilize domestic resources effectively, including improving tax and customs compliance and protecting oil revenues.
The planned tax reforms under the ARMOR program are expected to have significant implications across various economic sectors.”
According to the plan, affected stakeholders will include manufacturers of goods such as alcoholic beverages, tobacco products, and sugar-sweetened beverages (SSBs), telecom and banking service providers, importers, international traders as well as the general tax-paying public.
The plan document read: “Domestic Revenue Mobilisation drive in the government ARMOR program seeks to increase revenue on some targeted industries and sectors of the economy. Specific groups and agencies within affected sectors include:
“1. Association of Licensed Telecom Operators of Nigeria: The introduction of excises on telecom services requires that all telcos are mobilised to fully participate in the collection of such revenue.
“2. Committee of Bankers: Introduction of EMT levy on electronic money transfers through the Nigerian Banking System would need the buy-in all banking institutions
“3. Manufacturer’s Association of Nigeria: Manufacturers of tobacco products, sugar sweetened beverages(SSBs) and alcoholic beverages who would be required to collect excises on their products are critical stakeholders for the introduction of the new excise regime. They are currently organised into various sectoral groups under the Manufacturer’s Association of Nigeria (MAN). Producers of alcoholic beverages organised under the Distillers and Blenders Association of Nigeria also need to key into the reforms
“4. Importers: Strategic partners involved in importation of different items into the country will be mobilised to participate in the ARMOR program.
A key stakeholder group is the Association of Nigeria Customs Agents (ANCLA).
“5. Vehicle Importers and Manufacturers: Stakeholders in the automobile trade industry must be engaged on reforms involving the introduction of green taxes on high GHG emission vehicles. Local manufacturing and assembly of vehicles is growing through a phase of growth in Nigeria. The demand for vehicles is mostly met through importation by vehicle importers under the aegis of Association of Motor Dealers of Nigeria (AMDON).”
The document also emphasized the importance of engaging vulnerable groups to ensure they are not disproportionately affected by these changes.
It also said: Services that will be subjected to the newly introduced excises are regulated by key public sector agencies. The introduction of the new revenue measures will require the application of existing regulatory mechanisms available within these institutions.
The concerned institutions include
“1. Nigerian Communication Commission
“2. Central Bank of Nigeria.
“There are also agencies with the mandate for making policies on some of the issues covered in the ARMOR program with respect to policy framework on matters of public interest in Health and Environmental Protection. The government institutions relevant to ARMOR in this regard are.
“1. Federal Ministry of Environment
“2. National Environmental Standards Regulatory and Enforcement Agency (NESREA)
“3. Federal Ministry of Health.”
The PforR Program is part of a larger governmental initiative running from 2024 to 2028, aimed at reforming tax and excise regimes, enhancing the administrative capabilities of tax and customs, and ensuring transparency in oil and gas revenue management.
The document noted:
“The PforR Program scope includes a subset of actions from the government program to be conducted during 2024 to 2028 at the federal level.
The alignment ensures that the World Bank’s intervention supports and enhances the sustainability and impact of the government initiative during the main period of implementation with a focus on reforms of tax and excise regimes, tax and customs administrative improvements, and enhanced transparency of oil and gas revenues remitted by NNPCL.
“The government program is funded from annual budget allocations of $1.17 billion to FMF, FIRS and NCS. The PforR with results based financing of $730 million, and $20 million investment financing, is 62 percent of the program budget”
FIRS, NCS to get $5 million each.
Additionally, the program outlines specific allocations for technical assistance, with $5 million each going to the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) to support their capacity to implement these new measures effectively.
This includes the development of systems for better data sharing, risk-based audits, and compliance processes, as well as substantial investments in program management and capacity building.
There will also be $10 million for project management, tax policy capacity-building and other expenses. In total, the amount makes the $20 million investment financing before the release of $730 million in line with fiscal targets met.
Nigeria considers reinstating telecom tax to secure $750
