Soft Drinks to Get More Expensive as Nigerian Govt Perfect Plan to Reintroduce Excise Duty abolished in 1993

Soft Drinks to Get More Expensive as Nigerian Govt Perfect Plan to Reintroduce Excise Duty abolished in 1993

  • In the previous two years, the Nigeria Customs Service (NCS) has been lobbying for the reinstatement of excise duty on soft drinks, which was repealed in 1993
  • The return of excise duty, according to NCS, would result in a large increase in income for the federal government
  • Manufacturers, on the other hand, feel it will affect their revenue and lead to a rise in soft drink prices

The Nigerian government is putting the finishing touches on the reintroduction of excise duty on all non-alcoholic drinks manufactured in the country, which could affect push up the prices.

This is not the first time government is proposing a collection of excise duty on soft drinks.

Excise duty is a levy placed on the manufacture of locally produced goods.

In April 2021, Hameed Ali, comptroller-general of the NCS made repeated calls for tax waivers for companies producing soft drinks in Nigeria to be removed.

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Soft drinks to get more expensive as Nigeria
Workers supervise the Production line of a drink factory photo by Stephanie Findlay
Source: Getty Images

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Ali said:

“What we have been fighting for is that if alcohol beverages and tobacco are injurious to our health that is why the government decided to tax them, the carbonated drinks are equally injurious to our health and they should be taxed.

In 2019, also Zainab Ahmed, the minister of finance, had announced that the government may introduce excise duty on carbonated drinks.

The house of Representatives is not left out in the call to see the reintroduction of excise duty on soft drink.

Manufacturers react to excise duty

The Manufacturers Association of Nigeria (MAN) has decried the proposed re-introduction of excise duty on non-alcoholic drinks, saying producers could lose up to N1.9 trillion in revenue sales by 2025.

Specifically, the Chairman, Fruit Juice Producers branch of MAN, Mr Fred Chiazor said this while remarking at the MMS Business discourse in Lagos recently.

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Speaking on the theme, ‘X-raying the Proposed Excise Duty Regime for Carbonated Beverages in a Recovering Economy,’ Chiazor said the amount indicated a 39.5 per cent loss due to the imposition of the new taxes with a concomitant impact on jobs and supply chain.

He called for a suspension of the fiscal policy, noting that the proposed excise duty collection would shrink the sector’s contribution to the GDP which currently represents 35 percent of manufacturing.

He said:

“Government can lose up to N197 billion in Value Added Tax (VAT), EIT fund and Collective Investment Trust (CIT) revenues occasioned by the drop in industry performance.”

He also noted that there could be a change in prices of soft drinks to offset the expected loss from the reintroduction.

Dangote, MTN Top List of Highest Tax-Paying Companies in Nigeria

Legit.ng had earlier revealed how much 13 Nigerian companies listed on the Nigerian Exchange Limited (NGX) remitted to the Nigerian government.

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The Federal Inland Revenue Service (FIRS) is one of the collecting agencies and recently declared it exceeded its target in the first eight months of 2021.

Companies operating in Nigeria are meant to pay income tax, Education tax, National Information Technology Development Agency (NITDA) tax, and Nigeria Police Trust Fund levy.

Source: Legit Nigeria

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