The Federal Government of Nigeria has unveiled a new tax regime targeting beer, imported vehicles, and single-use plastics.
The move, which is expected to significantly impact consumers, manufacturers, and importers, also includes an expanded list of items prohibited from import.
Under the revised tax laws, a flat rate of N75 will be levied per litre of beer or stout imported into Nigeria, according to Finance Minister Zainab Ahmed on Saturday, April 29, 2023.
This new excise duty replaces the previous ad valorem system, which taxed goods based on their estimated value. The same excise rate will be applied to imported wine. The tax on beer and stout is set to increase further to N100 per litre in 2024.
The new regulations, which will come into effect on June 1, 2023, also introduce an Import Adjustment Tax (IAT) on vehicles.
Two-litre engine vehicles will attract a 2% IAT, while vehicles with four-litre engines and above will be subjected to a 4% IAT.
However, vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles have been exempted.
In a nod to environmental concerns, the Federal Government has also instituted a ‘Green Tax’ on Single Use Plastics (SUPs), including plastic containers, films, and bags, at a rate of 10%.
Details of the new tax regime were quietly communicated to all Ministries, Departments, and Agencies via a circular (HMFBNP/MDAs/circular/2023FP/04) issued by the Federal Ministry of Finance Budget and National Planning on April 20, 2023.
The changes were revealed to the public by Mr Taiwo Oyedele of PricewaterhouseCoopers on Twitter.
President Buhari’s parting tax gift to Nigerians
The Federal Government of Nigeria has introduced new Fiscal Policy Measures (FPM) for 2023 via a Circular dated 20 April 2023 signed by the Minister of Finance, Budget and National Planning. Below are some of the highlights:
1.… pic.twitter.com/lwgvgbCWC9
— Taiwo Oyedele (@taiwoyedele) April 29, 2023
The import prohibition list has also been revised, now including used motor vehicles over 12 years old and an array of pharmaceutical products, including paracetamol tablets, cotrimozazole tablets and syrups, metronidazole tablets and syrups, and chloroquine tablets and syrups.
The ban extends to certain types of vitamins, aspirin, and other medications.
In a significant decision regarding telecommunications, the circular reconfirmed the imposition of a 5% excise duty on telecommunication services introduced via the Finance Act 2020, covering mobile telephone services (GSM), fixed telephone and internet services, both postpaid and prepaid.
The sweeping tax and import changes are part of the Supplementary Protection Measures (SPM) related to the implementation of the ECOWAS Common External Tariff 2022-2026. The circular stated that these changes would be effective from May 1, 2023, subject to a 90-days grace period for importers who had opened Form M before May 1, 2023.
These tax shifts are likely to have far-reaching effects on both the Nigerian economy and its citizens, with implications for consumption patterns, manufacturing, and environmental sustainability.
