Nigerian government to increase excise duty on alcohol, tobacco

NIGERIA – the Nigerian government has unveiled its Strategic Revenue Growth Initiative (SRGI) which will see an increase in excise duty rates from the current 5% on alcohol, carbonated soft drinks, tobacco and other goods.

Speaking during the launch of the SRGI, the Minister of Finance, Mrs. Zainab Ahmed, said the implementation of the initiative will ensure sustainable revenue generation in various sectors of the economy.

Mrs Zainab revealed that excise duties would be enlarged to include alcohol, carbonated drinks and tobacco while increasing VAT from the current rate of 5% on selected items.

“We are considering increasing excise duties to include carbonated drinks, just like you have excise duties on tobacco and alcoholic drinks.

“But this is going to be a subject of a study because we have to identify which ones to be affected and the best way to apply the taxes.

So we have some work to do before we can say this will be done in March, in June, September of December of 2019,” she said.

However, she added that the VAT increase will yet to undergo a comprehensive study since it requires an amendment of the law saying that the increase is likely to be implemented on special items but not across all categories.

“During the course of 2019, we will have the clarity as to which items and what the rate will be and we will have to take a request to the National Assembly for amendment to the law,” she said.

Speaking in the same vein, the Chairman of the Federal Inland Revenue Service (FIRS) Mr. Babatunde Fowler, disclosed that only a handful of items would be affected in the upward review of the VAT.

“Those who want to take Champagne, I believe will not mind paying some more tax on it,” Fowler added.

The minister said that the new push for revenue generation had become necessary due to the low level of its record over the years, amid mounting expenditure needs.

Luxury goods are among the items to be affected by the increase in tax.

In 2016, Nigeria was ranked fourth globally in the volume of soft drink sales and the leading beer consuming country in Africa with experts projecting a 5%  annual growth rate (AGR) by 2020.

At present, there are over 8 functional breweries in Nigeria with a cumulative production capacity of over 1.7 billion litres per annum translating to about US$540 million revenue generation.

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