Money

FG Set To Remove 5% Tax on Every Airtime Purchase By Nigerians, as it Looks to Raise Funds For N17.1trn Budget

Tuesday, May 24, 2022 at 4:07 PM by Dave Ibemere

Nigerians could be in for a new change in the coming months, as the federal government looks to tax phone calls and airtime
From June for every airtime purchased in the country a 5% tax deduction will be made as contained in a new law
President Buhari has signed off the new tax and this will could help further boost non-oil income revenue to finance the 2022 budget of N17.1trn

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Starting from June 2022, the federal government will charge a five per cent tax for every airtime purchased by Nigerians.

This is in addition to one kobo per second tax for phone calls as earlier reported.

The five per cent tax on airtime was recently added and approved in the Finance Act 2021, which took effect from January 1, 2022.

What are Excise duties?

Excise duties are internal taxes that are levied on the sale of specific goods and services, such as alcohol, fuel, and tobacco – often goods the government wants to discourage the use of.

It is an indirect tax that is not paid by the customers directly – instead, the excise tax is imposed on the supplier or the producer, who then includes it in the product price.

The inclusion of telecommunication services provided in Nigeria is the most recent change to the excise duty regime in the country.

In the case of airtime purchases, the government would impose it on the network operators, which will, in turn, pass it to the subscriber.

The budget office defends the move

At a function in 2021, Ben Akabueze, director-general of the Budget Office of the Federation, said Nigeria was lagging behind other African countries in implementing the excise tax on the sector.

He also added that the government is expecting to fund the Nigerian budget for 2022 from the proceeds of the five per cent excise duty.

Akabueze said:

“Last year, we found that 51 countries in Africa have excise on airtime charges; so we are looking at that as well as an area (to tax)."

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