The Nigerian Gambling Industry could be impacted by the excise 5 per cent tax on telecommunication companies.
The Nigerian sports betting industry has been experiencing exponential online gambling growth over the last five years. This is thanks to the emergence of enabled technology in the payment sector, affordable features of mobile phones and smartphones providing the benchmark for mobile phone penetration.
The essential part of the growth is the open market approach to allow a competitive telecommunication sector. This provides leverage for affordable internet data to the teaming youth. Mobile is the first choice resort for the average Nigerians to access the internet; this technological and infrastructural development has been pivotal to the spike in online gambling and betting in the market.
However, the industry could experience some setbacks in online gambling and betting and for operators in the sports betting industry as the federal government of Nigeria announced plans to increase tax by five percent inclusive excise duty on telecommunication services.
As a result, it practically means that telecommunication subscribers would pay a 12.5 percent tax on all telecommunication services, including calls, Internet data services, and SMS. This is one of the marketing strategies sports betting operators use judiciously to connect and sell their promotions with punters in Nigeria. Understandably, the operators will feel the impacts of the proposed tax that will take effect later this year. The Minister of Finance Budget and National Planning, Zainab Ahmed, made this announcement in Abuja on Thursday, July 28.
According to the local media, the proposed five percent will be added to the already existing 7.5 percent Value Added TAX (VAT) on telecommunications services.
Ms. Ahmed, represented by the Assistant Chief Officer of the Ministry, Frank Oshanipin, said the five percent excise duty in the Finance Act 2020 was not implemented because the government engaged with stakeholders. “Payments are to be made every month, on or before the 21st. The duty rate was not captured in the Act because it is the responsibility of the president to fix the rate on excise duties, and he has set five percent for telecommunication services, including GSM. Public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue. Gbenga Adebayo, chairman of the Association of Licensed Telecoms Owners of Nigeria (ALTON), said the burden would be on telecommunications consumers.
He states, “It means that subscribers will now pay 12.5 per cent tax on telecom services, we will not be able to subsidise the five per cent excise duty on telecom services. This is due to the 39 multiple taxes we are already paying and the epileptic power situation as we spend so much on diesel.”
However, the responsibility of generating revenue to run government lies with us all,” she said. This is coming as the Nigerian government relies heavily on crude oil, has been unstable in prices recently due to the ongoing war in Europe, and has been diversifying its resources by focusing on other sectors. The diversification plan prompted sectors such as the gaming industry to focus on self-sufficiency and generate income for the government coffers through its lottery games. They have made a striding move to launch its National game logo through the National Lottery Regulatory Commission (NLRC), a welcome development for the lottery industry.
