Nigeria may reinstate a previously suspended telecom tax and other fiscal measures as it seeks to secure a new $750 million loan from the World Bank.
This is according to the Stakeholder Engagement Plan for Nigeria – Accelerating Resource Mobilisation Reforms (ARMOR) P-For-R (P177308) program dated March 2024, between Nigeria and the World Bank.
A copy of the plan’s document was obtained and seen by TheWitness suggest the government reintroduces the excises on telecom services, EMT levy on electronic money transfers through the Nigerian Banking System among other taxes.
President Bola Tinubu in July 2023 ordered the suspension of the 5% excise duty on telecommunications and the Import Tax Adjustment levy on certain vehicles.
However, it appears that this suspension may be lifted to meet the program targets for a new, yet-to-be-approved World Bank loan.
TheWitness has confirmed that negotiations are ongoing between the Federal Government and the World Bank.
The program’s development objective is to strengthen the government’s financial position by enhancing its capacity to manage and mobilize domestic resources effectively, which includes 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, as well as the general tax-paying public.
Importers and international traders will also feel the impact of these new fiscal policies.
Key industry groups such as the Association of Licensed Telecom Operators of Nigeria (ALTON) are engaged regarding the excise duties on telecom services.
The banking sector, represented by the Committee of Bankers, are engaged regarding the introduction of an Electronic Money Transfer (EMT) levy on transactions processed through Nigerian banks.
Additionally, the Manufacturers Association of Nigeria (MAN) will play a crucial role, particularly for those involved in producing targeted products such as tobacco and alcoholic beverages.
The plan document read:
The document also emphasized the importance of engaging vulnerable groups to ensure they are not disproportionately affected by these changes.
It also said:
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 World Bank’s contribution of $750 million constitutes a significant portion of the program’s budget.
The Federal Government is expected to contribute $1.17 billion through annual budgetary.
The document noted:
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.
