To secure a substantial loan of $750 million from the World Bank, President Bola Tinubu is considering the revival of previously abolished telecom taxes and other fiscal policies.
A document from the Stakeholder Engagement Plan for Nigeria’s Accelerating Resource Mobilisation Reforms program, a joint initiative with the World Bank, hints at the possible revival of taxes on telecom services and digital money transfers.
The five per cent excise duty on telecommunications and the Import Tax Adjustment levy on certain vehicles, which were suspended by Chief Bola Tinubu in July 2023, might be reinstated to meet the new loan’s objectives. Negotiations between the government and the World Bank are currently underway.
The program’s goal is to strengthen the government’s financial position by enhancing its ability to effectively manage and mobilize domestic resources. This includes improving tax and customs compliance and protecting oil revenues.
The ARMOR program’s planned tax reforms are expected to have a significant impact on various economic sectors. This initiative, which is part of a larger government effort running from 2024 to 2028, aims to reform tax and excise regimes, enhance the administrative capabilities of tax and customs, and ensure transparency in oil and gas revenue management.
The World Bank’s contribution of $750 million constitutes a significant portion of the program’s budget, with the government expected to contribute $1.17 billion annually. Stakeholders likely to be affected include manufacturers of goods such as alcoholic beverages, tobacco products, and sugar-sweetened beverages, as well as telecom and banking service providers, importers, and international traders.
Key industry groups such as the Association of Licensed Telecom Operators of Nigeria are being consulted regarding the excise duties on telecom services. The program also emphasizes the importance of engaging vulnerable groups to ensure they are not disproportionately affected by these changes.
Furthermore, specific allocations for technical assistance include $5 million each for the Federal Inland Revenue Service and the Nigeria Customs Service to support their capacity to implement these new measures effectively. The program is funded from annual budget allocations, results-based financing, and investment financing, with a significant portion coming from the World Bank loan.
