The Nigerian government has approved amendan ment to the excise duty
rates for alcoholic beverages and tobacco with effect from Monday, June
4, 2018.
Following the presidential approval, Nigeria’s finance minister, Mrs.
Kemi Adeosun disclosed in a statement on Sunday that the new excise duty
rate on tobacco was now a combination of the existing ad-valorem based
rate and specific rate while the ad-valorem rate was replaced with a
specific rate for alcoholic beverages.
The Nigerian government has approved an amendment to the excise duty
rates for alcoholic beverages and tobacco with effect from Monday, June
4, 2018.
Following the presidential approval, Nigeria’s finance minister, Mrs.
Kemi Adeosun disclosed in a statement on Sunday that the new excise
duty rate on tobacco was now a combination of the existing ad-valorem
based rate and specific rate while the ad-valorem rate was replaced with
a specific rate for alcoholic beverages.
The Minister added, “For Alcoholic Beverages, the current ad-valorem
rate will be replaced with specific rates and spread over three years to
moderate the impact on prices. This will curb the discretion in the
Unit Cost Analysis (UCA) for determining the ad-valorem rate and prevent
revenue leakages.
“For Tobacco, the government will maintain the current ad-valorem
rate of 20 percent and introduce additional specific rates with the
implementation to be spread over a three-year period to also reasonably
reduce the impact on prices.”
Under the newly approved excise duty rates for tobacco in addition to
the 20 percent ad-valorem rate, each stick of cigarette will attract a
N1 specific rate per stick (N20 per pack of 20 sticks) in 2018, N2
specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k
specific rate per stick (N58 per pack of 20 sticks) in 2020.
The Minister explained that Nigeria’s cumulative specific excise duty
rate for tobacco was 23.2 percent of the price of the most sold brand,
as against 38.14 percent in Algeria, 36.52 percent in South Africa and
30 percent in the Gambia.
The new specific excise duty rate for alcoholic beverages cuts across
Beer & Stout, Wines and Spirits for the three years 2018 to 2020.
Under the new regime, Beer & Stout would attract N0.30k per centiliter (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020.
Wines would attract N1.25k per Cl in 2018 and N1.50k per Cl each in
2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018,
N1.75k per Cl in 2019 and N2.00k per Cl in 2020.
But manufacturers will enjoy a grace period of 90 days (three months)
before the commencement of the new excise duty regime, Nigeria’s
minister of finance said in a statement on Sunday.
The increase will not affect other locally excisable products and
will be spread over a three-year period from 2018 to 2020 in order to
moderate the impact on prices of the products, Adeosun stated.
The Minister disclosed that the new excise duty regimes followed
all-inclusive stakeholder engagements by the Tariff Technical Committee
of the Federal Ministry of Finance with key industry stakeholders.
According to her, the upward review of the excise duty rates for
alcoholic beverages and tobacco was to achieve a dual benefit of raising
the Government’s fiscal revenues and reducing the health hazards
associated with tobacco-related diseases and alcohol abuse.
She said, “The Tariff Technical Committee (TCC) recommended the
slight adjustment in the excise duty charges after cautious
considerations of the Government’s Fiscal Policy Measures for 2018 and
the reports of the World Bank and the International Monetary Fund
Technical Assistance Mission on Nigeria’s Fiscal Policy.
“The effect of the excise duty rates adjustment on trade and
investment was also assessed by the Federal Ministry of Trade and
Investment and it adopted the recommendations of the TTC.
“Furthermore, peer country comparisons were also carried out showing
Nigeria as being behind the curve in the review of excise duty rates on
alcoholic beverages and tobacco.”
The Minister added that the new excise duty regimes are in line with
the Economic Community of West African States (ECOWAS) directive on the
harmonization of member-states’ legislation on excise duties.
The ECOWAS Council of Ministers had at its 62nd and 79th Ordinary
Sessions in Abuja in May 2009 and December 2017, respectively, issued
directives on the harmonization of the ECOWAS Member States’
Legislations on Excise Duties.
The directives seek to harmonize member-states’ legislation on excise
duties of non-oil products and also stipulate the scope of application,
the rate of taxation, taxable event and amount.
SOURCE: SAHARAREPORTERS, NEW YORK
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