Tinubu Suspends 5% Excise Tax On Telecom Services, Importation Of Certain Vehicles

Posted by Rotimi Fadeyi Featured, Latest Headlines, News Across Nigeria Thursday, July 6th, 2023

(AFRICAN EXAMINER) – President Bola Tinubu on Thursday announced the reversal of some tax policies introduced by the ex-President Muhammadu Buhari administration.

Special Adviser to the President, Mr. Dele Alake, while addressing State House Correspondents said that some of the tax policies are being implemented retroactively with their commencement dates.

According to Alake, the President in fidelity to the pledge to put Nigerians at the center of government policies, has signed the following Executive Orders:

“The Finance Act (Effective Date Variation) Order, 2023, has now deferred the commencement date of the changes contained in the Act from May 23, 2023 to September 1, 2023. This is to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.

“The Customs, Excise Tariff (Variation) Amendment Order, 2023. This has also shifted the commencement date of the tax changes from March 27, 2023 to August 1, 2023 and also in line with the National Tax Policy.

“The President has given an Order suspending the 5% Excise Tax on telecommunication services as well as the Excise Duties escalation on locally manufactured products.

“Further to his commitment to creating a business-friendly environment, the President has ordered the suspension of the newly introduced Green Tax by way of Excise Tax on Single Use Plastics, including plastic containers and bottles” Alake said.

Alake stated that the President has also ordered the suspension of Import Tax Adjustment levy on certain vehicles, which have 2000 capacity

He explained that Tinubu as a listening leader, the President issued these orders to ameliorate the negative impacts of the tax adjustments on businesses and chokehold on households across affected sectors.

He stated that the President would not exacerbate the plight of Nigerians.

Alake said, “you will all recall that prior to the advent of this Administration, certain tax changes were introduced via the Customs, Excise Tariff (Variation)

Amendment Order, 2023 (henceforth referred to as “the Order”) published on the 8th of May 2023 and the Finance Act, 2023, which was signed into law on the 28th of May 2023.

“Among others, the Order introduced new Excise Duty on Single Use Plastics (SUPs), higher Excise Duties on some locally manufactured products, including alcoholic beverages and tobacco products, and Green Tax by way of Import Tax Adjustment on certain categories of imported vehicles.

“The Tinubu Administration has since noticed that some of the tax policies are being implemented retroactively with their commencement dates, in some instances, pre-dating the official publication of the relevant legal instruments backing the policies.

“This lacuna has created some challenges of implementation.

Indeed the intentions behind upward adjustments of some of these taxes are quite noble. They were designed to raise revenue as well as address environmental and health issues of concern. However, they have generated some significant challenges for, and elicited serious complaints amongst key stakeholders as well as in the business community.

“Let me mention some of the problems we have identified with the aforementioned tax changes. A document known as the 2017 National Tax Policy approved by the Federal Executive Council of the last administration prescribes a minimum of 90 days notice from government to tax-payers before any tax changes can take effect.

“This global practice is done with a view to giving taxpayers and businesses reasonable time to adjust to the new tax regime.

However,, both the Finance Act 2023 and the Customs, Excise Tariff Order 2023 did not give the required minimum notice period, thus putting businesses in violation of the new tax regime even before the changes were gazetted.

‘As a result of this, many of the affected businesses are already contending with the rising costs, falling margins and capacity underutilization due the various macroeconomic headwinds as well as the impact of the Naira redesign policy.

“Gentlemen of the press, you will also recall that Excise Tax increases on tobacco products and alcoholic beverages from 2022 to 2024, which had already been approved, are also being implemented. But a further escalation of the approved rates by the current Administration presents an image of policy inconsistency and creates an atmosphere of uncertainty for businesses operating in Nigeria.

“The Excise Tax of 5% on telecommunication services has generated heated controversy.

“There is also a lack of clarity regarding the status of this tax, just as players in the sector also complain about the imposition of multiple taxes on their operations.

“We have also seen that the Green Taxes, including the Single Use Plastics tax and the Import Adjustment Levy on certain categories of vehicles require more consultation and a holistic approach to the country’s net zero plan in a manner that does not impact the economy negatively”, Alake said.