FG to reintroduce telecom tax to meet $750m World Bank loan condition

The federal government is considering lifting the suspended telecom tax and other fiscal policies on Nigerians to secure a new loan of $750 million from the World Bank.

According to a document published by the World Bank, the EMT levy on electronic money transfers through the Nigerian banking system, along with other taxes, is also being considered, in addition to the reintroduction of excises on telecom services.

The government suspended the five per cent excise duty on telecommunications and the Import Tax Adjustment levy on certain vehicles in July 2023.

However, the document revealed that negotiations were underway between the World Bank and FG to secure the yet-to-be-approved loan.

The document said, “Domestic Revenue Mobilisation drive in the government ARMOR programme seeks to increase revenue on some targeted industries and sectors of the economy. Specific groups and agencies within affected sectors include the 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.

“Committee of Bankers: Introduction of EMT levy on electronic money transfers through the Nigerian Banking System would need the buy-in of all banking institutions.”

It noted that the Manufacturer’s Association of Nigeria (manufacturers of tobacco products, sugar-sweetened beverages and alcoholic beverages) that would be required to collect excises on their products “are critical stakeholders” for the introduction of the new excise regime.

The World Bank added, “They are currently organised into various sectoral groups under the Manufacturer’s Association of Nigeria. Producers of alcoholic beverages organised under the Distillers and Blenders Association of Nigeria also need to key into the reforms.

“Also, strategic partners involved in the importation of different items into the country will be mobilised to participate in the ARMOR programme. A key stakeholder group is the Association of Nigeria Customs Agents. Vehicle Importers and Manufacturers: Stakeholders in the automobile trade industry must be engaged in 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 the Association of Motor Dealers of Nigeria.”

The financial institution explained that services that will be subjected to the newly introduced excises “are regulated by key public sector agencies” and that the “introduction of the new revenue measures will require the application of existing regulatory mechanisms available within these institutions.”

The concerned institutions include the Nigerian Communication Commission and the Central Bank of Nigeria.

“There are also agencies with the mandate for making policies on some of the issues covered in the ARMOR program concerning policy framework on matters of public interest in Health and Environmental Protection.

“The government institutions relevant to ARMOR in this regard are the Federal Ministry of Environment, the National Environmental Standards Regulatory and Enforcement Agency, and the Federal Ministry of Health,” the document stressed.

Outlining specific allocations for technical assistance, the document pointed out that the government programme “is funded from annual budget allocations of $1.17 billion to FMF, FIRS and NCS. The PforR, with results-based financing of $730m and $20m investment financing, is 62 per cent of the program budget.”

“There will also be $10m for project management, tax policy capacity-building and other expenses. In total, the amount makes the $20m investment financing before the release of $730m in line with the fiscal targets met,” it added.