The Nigerian Federal Government has introduced new tax laws, effective from May 1, 2023. The new Fiscal Policy Measures (FPM) were announced through a circular signed by the Minister of Finance, Budget, and National Planning, Zainab Ahmed.
According to Taiwo Oyedele, the Fiscal Policy Partner & Africa Tax Leader at PricewaterhouseCoopers (PWC), the changes include the Supplementary Protection Measures (SPM) for the implementation of the ECOWAS Common External Tariff 2022-2026. News About Nigeria reports.
The list of affected items includes rice, woven fabrics, ceramics tiles and sinks, steel, containers for compressed or liquefied gas, aluminum cans, washing machines, electric generating sets and rotary converters, smartphones, new and used passenger motor vehicles, and electricity meters.
Most of the applicable duties for these items remain unchanged from the 2022 FPM rates, according to Oyedele.
However, revised excise duty rates have been introduced, with additional taxes ranging from 20% to 100% increases on previously approved rates for alcoholic beverages, tobacco, wines, and spirits, effective from June 1, 2023. These new rates are further increases over and above the 2022 FPM’s approved roadmap for 2022-2024.
Additionally, excise duty on non-alcoholic beverages is retained at the rate of N10 per liter. The government has also introduced a Green Tax, imposing excise duty on Single-Use Plastics (SUPs) including plastic containers, films, and bags at the rate of 10%.
Furthermore, 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%. However, vehicles below 2000 cc, mass transit buses, electric vehicles, and locally manufactured vehicles are exempted.
The 2023 FPM also confirms the excise duty on telecommunication services earlier introduced via the Finance Act 2020, applicable on mobile telephone services (GSM), fixed telephone, and internet services, both postpaid and prepaid at the rate of 5%.
Oyedele, however, pointed out some concerns with the new tax laws, including the lack of legal framework for the imposition of Green Taxes, policy inconsistency with previously approved rates, and insufficient engagement with affected stakeholders.
Additionally, the design of the Green Taxes and how the revenue generated will be utilized to fund CO2 net-zero initiatives remains unclear. There are also compliance requirements, such as tax base, frequency of payment, compliance timelines, penalties, and detailed regulations, that need to be clarified.
To avoid potential negative consequences on Nigerians, struggling businesses, and the fragile economy, Oyedele advised suspending and revisiting the 2023 FPM.
