New tax reforms will eliminate 26 state-level and 13 local government levies that have long frustrated telecom expansion in Nigeria.
The elimination of the 39 levies is targeted at boosting investment, cutting operational costs, and restoring investor confidence in the digital economy.
The Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) is targeting a full harmonisation that could see operators pay only the 12 statutory federal taxes, instead of being burdened with a fragmented web of federal, state, and local government charges.
Operators are currently required to pay as many as 12 levies to federal, 26 to state, and 13 to local government, ranging from well-established ones like company income tax (CIT), value added tax (VAT) and pay as you earn (PAYE), to more arbitrary charges such as effluent discharge levy, fire service permits, gaseous emission fees, fumigation fees, containerisation fees and tourism and hospitality permits, many of which have no direct relevance to the sector.
Read also: Business leaders hail tax reforms as catalyst for growth
An internal breakdown of the levies shows the extensive and sometimes baffling nature of the telecom tax net.
At the federal level, telcos pay statutory taxes like CIT, VAT, stamp duties, and withholding tax, along with sector-specific charges like NITDA levy, cybersecurity fund, aviation height clearance, annual operating levy, environmental impact assessment, Wayleave fees, and capital gains tax.
State, local government levels
It is at the state and local government levels that operators face the most complex and burdensome charges.
In several states, they pay for land use charge, Right of Way (RoW) renewal, planning permits, development levies, employee development levy, fire service levy, fumigation of Base Transceiver Stations (BTS), telecoms operation permit, gaseous emission permits, project assessment fee and tourism/hospitality levy.
In local governments, telcos are hit with building habitation permits, sewage fees, economy development fee, market trading levies, hawking permit, shop and social services levy, containerisation fees, radio/TV fees, and tenement rates.
Rural areas are often the most affected, as operators are reluctant to expand into locations where the cost of compliance, including unofficial levies, exceeds revenue potential.
Read also: Nigeria’s tax reform: Implications for the ICT and cybersecurity sector
Fragmented taxes
Industry stakeholders say these fragmented, excessive and sometimes duplicate levies are crippling telecom investment, slowing network expansion, and frustrating national efforts toward broadband penetration, rural connectivity, and economic inclusion.
“These taxes don’t just add up; they stack up in ways that are economically irrational and operationally disruptive. We are being taxed for doing business, taxed for existing, and then taxed again for operating the infrastructure that enables Nigeria’s digital economy,” Gbenga Adebayo, chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), told BusinessDay.
Adebayo warned that continued imposition of arbitrary levies at the state and local levels, without coordination or justification, will continue to discourage investment, slow broadband expansion, and limit service delivery to underserved communities.
He cited instances where telecom infrastructure trucks are stopped on highways by multiple agencies, each demanding different levies, many of which lack legal grounding.
Aminu Maida, executive vice chairman of the Nigerian Communications Commission (NCC), recently raised the alarm over this unsustainable trend, adding that the telecom sector is not just overtaxed but under siege.
“Operators are battling multiple taxes from different tiers of government, and on top of that, are victims of infrastructure vandalism and sabotage. The sector records an average of 1,700 attacks on telecom infrastructure every week, further compounding the industry’s operational and financial burden,” he said.
According to him, such relentless financial and physical pressures endanger Nigeria’s national broadband plan, economic recovery drive, and even its security architecture.
Lateef Fagbemi (SAN), minister of Justice and Attorney-General of the Federation, also weighed in by condemning the escalating sabotage of telecom infrastructure, announcing that the federal government will treat such acts as economic sabotage. “We will go after anyone sabotaging telecom infrastructure. Enough is enough. These installations are part of our national backbone. Damaging them is a direct attack on our economy,” Fagbemi said.
Read also: NCC sets stricter standards as telecom sector eyes $22.82bn by 2029
Tax harmonisation
Following years of sustained advocacy by industry players, especially ALTON, Nigeria on June 26, 2025, enacted four sweeping fiscal laws aimed at overhauling the country’s inefficient tax system: the Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service Act (NRSA), and Joint Revenue Board Act (JRBA). These legislative instruments are part of President Bola Tinubu’s broader fiscal reform agenda, spearheaded by the Presidential Committee on Fiscal Policy and Tax Reforms.
In a major policy shift, the federal government, through the Presidential Fiscal Policy and Tax Reforms Committee, has begun the process of harmonising the multiple taxes threatening to stifle telecom operations.
Taiwo Oyedele, chairman of the committee, disclosed that the tax reform body has identified 51 different taxes, levies and fees being paid by telecom operators across the country, a clear sign of how distorted the current tax system has become.
Oyedele noted that these include everything from CIT, cybersecurity fund contributions, fire service levies, to fumigation and gaseous emission fees, many of which are illogical, duplicated or outright extortive.
Oyedele said such fiscal pressure discourages investment, frustrates rollout of new infrastructure, and undermines Nigeria’s competitiveness in the global digital economy.
Meanwhile, the tax reform will tackle these challenges, Oyedele affirmed, adding that it includes several pro-growth incentives and adjustments that directly impact the ICT and telecom space.
“Withholding tax for telecom infrastructure providers has been reduced from 10 percent to two percent, freeing up cash flow for companies that previously paid more in advance taxes than their actual liabilities.
Read also: How Nigeria’s tax reforms will cut debt, ease low-income earners
“Small businesses (with revenue under N100 million) are now exempt from CIT and the Development Levy, a move that could encourage formalisation of startups in the telecoms and digital services space.
“Companies investing in infrastructure are eligible for a five percent annual tax credit for five years under the Economic Development Incentive (EDI) scheme. VAT input recovery is now allowed on services and fixed assets, reducing operational costs for firms with high capital expenditure,” he revealed.
According to the committee chairman, this reform is a direct response to the chaotic environment that has hampered sectors like telecommunications for years.
“Nigeria’s tax system was taxing poverty, capital and innovation. Over 90 percent of the taxes imposed on telecom operators were either duplicative, ambiguous, or outright extortionate. We are changing that narrative with the tax reforms,” he affirmed.
