Nigerians to buy vehicles, beer, cigarettes at high cost as FG increases taxes

Nigerians are set to experiences more hard life under the regime of President Buhari as federal government is in the process of revising excise duty on alcoholic beverages, cigarettes and tobacco products, according to a circular just signed by Finance Minister Zainab Ahmed.

It also plans to introduce a Green Tax made up of excise duty on Single Use Plastics (SUPs) and Import Adjustment Tax (IAT) levy on motor vehicles of 2000cc and above.

The Green Tax is said to be part of Nigeria’s commitment to climate change adaptation and mitigation to environment degradation.

The minister, in the April 20, 2023 circular entitled ‘Approval for the Implementation of the 2023  Fiscal Policy Measures and Tariff Amendments’ said non-alcoholic beverages, fruit juice, energy drink and aerated water will attract an excise duty of N10 per litre.

Excise duty for beer, stout and other alcoholic beverages not made from malt (whether fermented or not fermented) is N75 per litre in 2023 and will increase to N100 in 2024.

The same rate applies to wine (alcoholic) while whisky, brandy, vodka and rum will command an excise duty of N150 per litre in 2023 and N200 per litre in 2024

It is N8.20 per stick and N1500 per kilogramme or N3,500 per litre for cigarettes and tobacco products in 2023 and N2,000 per kg or N4,000 per litre in 2024.

Until now, government taxed imported alcoholic beverages using ad valorem rates; that is levying of tax or customs duties proportionate to the estimated value of the goods or transaction concerned. Now there is a specific rate, not an estimate.

The minister listed 189 items which will attract additional levy in line with the regulations of the Economic Community for West African States (ECOWAS) Common External Tariff (CET).

In this category are rice, margarine, Portland cement, raw cane sugar, malt extract, greases, brake fluid, salt, paper or paperboard  labels of all kinds, notebooks, envelopes, diaries and similar products; woven fabrics of cotton, unglazed ceramic tiles, corrugated bars and rods.

The rest include aluminium plates, sheets and strips, electric generating sets and rotary converters of an output not exceeding 75kva, printers/printing machines, four wheel drive vehicles, used passenger motor vehicles of a cylinder capacity 1500cc but not exceeding 3000cc, parts and accessories  of motor vehicles of 87.01 to 87.05.

The additional levy ranges between five and twenty percent.

The third schedule of fiscal policy measures and tariff amendments contains a list of items prohibited from importation into the country.

On the list are: used vehicles above 12 years from the year of manufacture, used compressors, used air conditioners, live or frozen poultry, pork, beef, cane or beet sugar, spaghetti, cocoa butter, fruit juice in retail packs, waters including mineral waters and aerated waters, bagged cement and mosquito repellant.

Similarly prohibited are medicament such as Paracetamol tablets/syrups, Cotrimozazole tablets/syrup, Metronidazole tablets/syrups, Chloroquine tablets/syrups, Haematinic formulations and Multivitamins tablets, capsules and syrups (except special formulations), ointments penicillin/gentamycin and intravenous fluids, soaps, detergents, and mineral or chemical fertilizers.

The Green Tax on Single Use Plastics (SUPs), including plastic containers, films and bags, is 10 percent.

An Import Adjustment Tax (IAT) levy has been introduced on motor vehicles of 2000 cc to 3999 cc at 2 per cent while 4000 cc and above will be taxed at 4 per cent.

Vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles are exempted.

The circular has rested the matter over the imposition of five per cent excise duty on telecommunication services earlier introduced via the Finance Act 2020 and prescribed in the Official Gazette No. 88, Vol. 109 of 11 May 2022 approved by the President.

Going forward, the five per cent tax will now apply to mobile telephone services (GSM), fixed telephone and internet services, both postpaid and prepaid.

Under the Supplementary Protection Measures (SPM) as it relates to the implementation of the ECOWAS Common External Tariff 2022-2026, the circular stated that the changes are effective from 1 May 2023 subject to 90-days grace period for importers who had opened Form M before 1 May, 2023.

Items on the list include rice, woven fabrics, ceramics tiles and sinks, steel, containers for compressed or liquified gas, aluminum cans, washing machines, electric generating sets and rotary converters, smart phones, new and used passenger motor vehicles and electricity meters. The applicable duties for most of the items are unchanged from the 2022 FPM rates.