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FG imposes taxes on carbonated, sweetened drinks, others

Carbonated and sweetened drinks

The Federal Government, yesterday, announced the introduction of N10 per litre excise duty on non-alcoholic and sweetened beverages, which it hinted at in 2019.

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said the tax became law to discourage excessive consumption of sugar in beverages and attendant health hazards.

Ahmed disclosed this while giving a breakdown of the highlights of the 2022 Appropriation Act, in Abuja, adding that the new tax was imposed as part of critical policy thrusts of the Finance Act 2021.

She said: “In section 17 of the Finance Act, there is a law that has imposed a duty on non-alcoholic carbonated sweetened beverages. There is an excise duty of N10 per litre imposed on all non-alcoholic carbonated and sweetened beverages.

“This is designed to discourage excessive consumption of sugar in beverages which contributes to a number of health conditions including diabetes and obesity.

“This new sugar tax is introduced to raise excise duty and revenues for health-related issues and other critical expenditures. It is in line with the 2022 budget priorities.”

Manufacturers’ plea

However, the new tax comes despite appeals by the Manufacturers Association of Nigeria (MAN), to abort the plan.

The Director-General, MAN, Segun Ajayi-Kadir, had argued that the tax will be counterproductive to local manufacturers of beverages and non-alcoholic drinks in the country.

Ajayi-Kadir also complained about the excessive duty, tariffs on the manufacturing sector, and asked the government to review them this year.

He noted that the sector is still battling the debilitating disruptive effect of the COVID-19 pandemic, inability to access the government’s relief funds, foreign exchange rate volatility and more importantly, raw materials’ challenges.

He said: “We want to see the federal government halting the plans to introduce new excise duty collection on carbonated and non-alcoholic drinks in the country this year.

“Burden of multiple taxes has been affecting our businesses and production heavily. Our manufacturing sector is yet to fully stabilise from numerous straits confronting manufacturing, propagated by fiscal and monetary policies of the government.”

This new sugar tax is introduced to raise excise duty and revenues for health-related issues and other critical expenditures. It is in line with the 2022 budget priorities.

Other taxes

Ahmed equally announced that the e-commerce business of non-resident companies would be taxed on a fair and reasonable turnover basis at six per cent of turnover.

She explained: “Such digital services include apps, high-frequency trading, electronic data storage, online advertising, and several others.

“The rationale for this is to modernise taxation of ICT and digital economy in line with current realities and this is in conformity with the provisions of the National Development Plan of 2021 – 2025.

“So if you visit Amazon as an example, we expect Amazon to add a value added tax (VAT) charge to whatever transaction you are paying. We are going to be working with Amazon to agree to register as a tax agent with the Federal Inland Revenue Service (FIRS). So Amazon would collect the payment and remit it to FIRS.

“This is in line with global best practice. They do not need to be registered companies in Nigeria, they just need an arrangement with FIRS where they collect VAT on behalf of FIRS and remit to FIRS.”

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