The Federal Government has scrapped the 5% excise duty earlier imposed on telecommunications services, a policy reversal that is expected to ease cost pressures for millions of Nigerian subscribers.
The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Aminu Maida, confirmed the development, stating 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 said
The government noted that the development is expected to bring relief to over 171 million active telecom users across the country, many of whom have faced a 50% tariff increase implemented earlier this year.
The 5% excise tax on telecommunications was introduced in 2022 under the Buhari administration as part of a plan to raise more non-oil revenue for the government. It covered both voice and data services, with operators directed to remit on or before the 21st of every month. Officials justified the levy by pointing to Nigeria’s widening revenue shortfall and the need to expand the tax net beyond oil earnings.
From the outset, the tax drew criticism from telecom operators who warned that it would place an extra burden on both the industry and consumers. The Association of Licensed Telecom Operators of Nigeria (ALTON) explained that companies were already struggling with more than 39 different taxes, a 7.5% VAT, and a mandatory 2% contribution of annual revenue to the Nigerian Communications Commission.
Added to that were soaring operating costs, particularly from heavy spending on diesel to power base stations in the face of unreliable electricity.
Operators made it clear that they could not absorb the new levy and would pass the cost directly to subscribers, effectively raising the total tax burden on telecom services to about 12.5%. They argued that the policy was not sustainable, describing it as unhealthy for the sector and damaging to consumers already grappling with high living costs.
NCC approved a 50% increase in telecom tariffs effective January 2025. Operators had initially requested as much as a 100% increase, but NCC settled on 50% to balance between rising operational costs and the need to protect consumers. Costs like inflation, rising fuel and energy prices, foreign exchange shortages, and increased costs for importing telecom equipment were cited as justification.
Data prices increased substantially. For example, MTN’s monthly data plan changed: the 1.8GB plan rose from N1,000 to N1,500. Similarly, a 20GB plan went from N5,500 to N7,500. SMS rates also rose: a text message that used to cost N4 now costs N6.
The average cost of 1GB of data rose. Before the hike, it was around N287, then moved to about N431 in advertised price zones, though some operators listed even higher depending on the plan.
But the hike has already started to bite for many households. Where telecom was once among the more predictable parts of monthly expenses, the increase creates pressure, especially for lower-income users who may need to scale back data usage, stay with cheaper plans, or limit non-essential apps.