Kemi Adeosun

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Buhari approves new excise duty rates for alcohol, tobacco

alcohol_and_tobacco | www.drinks.ng

President Muhammadu Buhari has approved new excise duty rates for alcoholic drinks and tobacco with effect from Monday, 4th June 2018.

Minister of Finance, Mrs Kemi Adeosun, who made this known on Sunday in Abuja, added that the President has also granted a grace period of 90 days (three months) to all manufacturers before the commencement of the new excise duty regime.

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

Adeosun further disclosed that the new excise duty regimes followed all-inclusive stakeholder engagements by the Tariff Technical Committee of the Federal Ministry of Finance with key industry stakeholders.

According to her, the new excise duty rates for alcoholic beverages and tobacco is in line to raise fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse.

“The Tariff Technical Committee (TCC) recommended the slight adjustment in the excise duty charges after cautious considerations of the Government’s Fiscal Policy Measures for 2018 and the reports of the World Bank and the International Monetary Fund Technical Assistance Mission on Nigeria’s Fiscal Policy.

“The effect of the excise duty rates adjustment on trade and investment was also assessed by the Federal Ministry of Trade and Investment and it adopted the recommendations of the TTC.

“Furthermore, peer country comparisons were also carried out showing Nigeria as being behind the curve in the review of excise duty rates on alcoholic beverages and tobacco.”

Adeosun also disclosed that the new excise duty rate on tobacco was now 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 (UCA) 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.”

Under the newly approved excise duty rates for tobacco in addition to the 20 percent ad-valorem rate, each stick of cigarette will attract a N1 specific rate per stick (N20 per pack of 20 sticks) in 2018, N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020.

The Minister 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.

The new specific excise duty rate for alcoholic beverages cuts across Beer & Stout, Wines and Spirits for the three years 2018 to 2020.

Under the new rates, Beer & Stout would attract N0.30k per centilitre (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020. Wines would 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 N2.00k per Cl in 2020.

The Minister added that the new excise duty regimes are in sync with the Economic Community of West African States (ECOWAS) directive on the harmonisation of member-states’ legislation on excise duties.

ECOWAS Council of Ministers had at its 62nd and 79th Ordinary Sessions in Abuja in May 2009 and December 2017, respectively, issued directives on the harmonisation of the ECOWAS Member States’ Legislations on Excise Duties. The directives is in order to harmonise member-states’ legislation on excise duties of non-oil products and also stipulate the scope of application, the rate of taxation, taxable event and amount.

alcohol_and_tobacco | www.drinks.ng
Posted inNews updates

Buhari approves new excise duty rates for alcohol, tobacco

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Alcohol Prices to Increase as Finance Minister Proposes New Tariffs

Drinking Alcohol | www.drinks.ng

Alcohol drinkers in Nigeria may have to pay extra to enjoy their favourite brands as Kemi Adeosun, minister of finance, is proposing increased tariff for alcohol and cigarette.

Adeosun’s proposal is in line with the implementation of the ECOWAS common external tariff (CET), which is aimed at strengthening a common market among member states as agreed upon on October 25, 2014.

The minister has submitted a memo to the Presidency suggesting that a two-part tariff is approved for tobacco products. A two-part imposes two types of import levies on the same item.

The memo suggested that a specific tariff of 35 kobo per CL be placed on beer and stout, N1.50k per CL on wines, and N2 on spirits and other alcoholic beverages.

For cigarettes, Adeosun suggested a 20 percent “ad valorem” tariff and a specific tariff of N1 per stick be placed on cigarettes and tobacco products. Ad valorem tariff is levied as a fixed percentage of the value of a commodity.

According to the minister, the proposed tariff increase is a recommendation made by the Tariff Technical Committee (TTC), which is chaired by the ministry of finance with members from ministries of industry, agriculture, Central Bank of Nigeria, Federal Inland Revenue Service, Office of the Secretary to the Government and Manufacturers Association of Nigeria.

“Further to the request, the chief of staff to Mr. President requested for my views on the matter. As a result of this, the TTC deliberated on the subject and recommended for an upward review of excise rate on tobacco and alcohol, taking into consideration their health implications and revenue potentials,” she wrote.

“In addition, it also recommended the introduction of a specific rate of excise on alcohol including beers and a mixture of ad valorem and specific rate excise structure on tobacco products in ECOWAS member states.

“In line with the recommendations of the TTC, I wrote and requested Your Excellency’s consideration and approval for the proposed revised rates of excise on alcohol and tobacco, vide letters: FMF/OHMF/TA/1/2017, dated 30th October 2017 and FMF/PHMF/ALCOHOL/1/2017, dated 8th November 2017.”

In November, Adeosun told the ECOWAS financial council of ministers that the federal government was working on policies to increase taxes on tobacco and alcohol.

 

Drinking Alcohol | www.drinks.ng
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Alcohol Prices to Increase as Finance Minister Proposes New Tariffs

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