The Nigerian government has introduced new taxes on imported goods, alcoholic beverages, tobacco, single-used plastics, telecommunication services and motor vehicles with large engines.
The federal government announced the new Fiscal Policy Measures (FPM) for 2023 via a circular dated 20 April 2023 signed by the Minister of Finance, Budget and National Planning, Zainab Ahmed.
Some of the highlights of the new taxes include; Supplementary Protection Measures (SPM) – which relates to the implementation of the ECOWAS Common External Tariff 2022-2026. The changes are effective from 1st May 2023 subject to a 90-day grace period for importers who had opened Form M before 1st 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, smartphones, new and used passenger motor vehicles and electricity meters. The applicable duties for most of the items are unchanged from the 2022 FPM rates.
Revised Excise Duty Rates – the memo hinted at an additional excise taxes ranging from 20% to 100% increases on previously approved rates for alcoholic beverages, tobacco, wines and spirits have been introduced effective from 1 June 2023. These are further increases over and above the 2022 FPM’s approved Roadmap for 2022-2024 in the form of new and higher ad valorem excise duties and specific rates. The excise duty rate on non-alcoholic beverages is however retained at the rate of N10 per litre.
The memo saw the introduction of a Green Tax by way of excise duty on Single Use Plastics (SUPs) including plastic containers, films and bags at the rate of 10%. Also, an Import Adjustment Tax (IAT) levy has been introduced on motor vehicles of 2000 cc to 3999 cc at 2% while 4000 cc and above will be taxed at 4%. Vehicles below 2000 cc, mass transit buses, electric vehicles, and locally manufactured vehicles are exempted. The new rules take effect from 1 June 2023.
Telecommunication Tax – the 2023 FPM confirms the excise duty on telecommunication services earlier introduced via the Finance Act 2020 and prescribed in the Official Gazette No. 88, Vol. 109 of 11th May 2022 approved by the President. The tax is applicable on mobile telephone services (GSM), fixed telephone and internet services, both postpaid and prepaid at the rate of 5%
Fiscal Policy Partner and Africa Tax Leader at PwC, Taiwo Oyedele while breaking down the new taxes said on Legality: “It should be noted that the Green Taxes are not supported by a specific enactment to provide the legal framework or delegated authority for the imposition of the tax as is the case for beverages and telecommunication services for instance.
“The design of the Green Taxes and how the revenue generated will be utilised to fund CO2 net-zero initiatives appear hazy.” He added.
