FG Okays New Excise Duty For Alcoholic Beverages, Tobacco

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  • Exempts other locally excisable products

BY EDMOND ODOK, ABUJA – The Federal Government says effective from Monday, June 4, 2018, its new excise duty rates for alcoholic beverages and tobacco will fully become operational.

Minister of Finance, Mrs Kemi Adeosun said in Abuja on Sunday that President Muhammadu Buhari approved the rates’ amendment and also granted a 90-day (three months) grace period to all manufacturers before the new excise duty regime commences.

Mrs Adeosun however said the government did not increase excise duty of other locally excisable products, even as she added that the new excise duty rates are spread over a three-year period from 2018 to 2020 to moderate impact on products’ prices.

The Minister, who explained that the new duty regime followed all-inclusive stakeholders’ engagements by the Tariff Technical Committee of the Federal Ministry of Finance with key industry stakeholders, said reviewing upward the excise duty rates for alcoholic beverages and tobacco aims at achieving a dual benefit of raising government’s fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse.

According to her, “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 (IMF) 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.”

She explained that with the Presidential approval, the new rate on tobacco is now a combination of the existing ad-valorem base rate and specific rate while the ad-valorem rate is replaced with a specific rate for alcoholic beverages., adding that; “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 per centand introduce additional specific rates with the implementation to be spread over a three-year period to also reasonably reduce the impact on prices.”

In addition to the 20 per cent ad-valorem rate, the new duty regime for tobacco will have each stick of cigarette attracting 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.

She said Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand, as against 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in 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 eachin 2019 and 2020.

Wineswould 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.

The Minister added that the new excise duty regimes are in line with the Economic Community of West African States (ECOWAS) directive on the harmonisation of member-states’ legislations on excise duties.

Recalled 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 harmonisation of the ECOWAS Member States’ Legislations on Excise Duties.

The directives seek to harmonise member-states’ legislations on excise duties of non-oil products and also stipulate the scope of application, rate of taxation, taxable event and amount.

         BREAKDOWN OF THE NEWLY APPROVED EXCISE DUTY RATES

 YEAR             TOBACCO        BEER      WINE    SPIRITS
         Naira Per Stick  Naira Per Cl Naira Per ClNaira Per Cl
2018Ad-valorem Rate of 20% + N1 specific rate per stick          0.30          1.25         1.50
2019Ad-valorem Rate of 20% + N2 specific rate per stick          0.35          1.50         1.75
2020Ad-valorem Rate of 20% – N2.90k specific rate per stick          0.35          1.50        2.00

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