Nigeria harmonizes ECOWAS Excise Duty for Beer, Tobacco

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By Franklin Ocheneyi

“THE new specific excise duty rate for alcoholic beverages cut across beer and stout, wines and spirits for the three years, 2018 to 2020. Under the new regime, beer and stout will attract .30k per centiliter (Cl) in 2018 and 35k per Cl each in 2019 and 2020. Wines will 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 per Cl in 2020.”

Those words came from Mrs. Kemi Adeosun, Nigeria’s Minister of Finance, when she confirmed that President Muhammadu Buhari has approved an amendment to the excise duty rates for alcoholic beverages and tobacco, adding that the president also granted a grace period of 90 days to manufacturers of the products before the commencement of the new duty regime.

According to her, the upward review of the excise duty rates for alcoholic beverages and tobacco were in line with the Economic Community of West African States (ECOWAS) directive on the harmonisation of member-states’ legislations on excise duties, and also to raise the government’s fiscal revenues.

According to her, the ECOWAS Council of Ministers had at its 62nd and 79th Ordinary Sessions in Abuja in May 2009 and December 2017, 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, the rate of taxation, taxable event and amount.

She said the new excise duty rates would spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.

Adeosun said the new duty rate on tobacco was a combination of the existing ad-valorem base rate and specific rate while the ad-valorem rate was replaced with a specific rate for alcoholic beverages.

“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 for determining the ad-valorem rate and prevent revenue leakages.

“For tobacco, the government will maintain the current ad-valorem rate of 20 percent and introduce additional specific rates with the implementation to be spread over a three-year period to also reasonably reduce the impact on prices,”¬† said Adeosun.

She said that under the newly approved excise duty rates for tobacco in addition to the 20 percent ad-valorem rate, each stick of cigarette will attract one naira specific rate per stick, that is N20 per pack of 20 sticks in 2018,

She said that tobacco would in 2019 attract duties of two nairas specific rate per stick, that is N40 per pack of 20 sticks in 2019 and N2.90 kobo specific rate per stick, which is N58 per pack of 20 sticks in 2020.

Adeosun explained that Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 percent of the price of the most sold brand as against 38.14 percent in Algeria, 36.52 percent in South Africa and 30 percent in the Gambia.

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