President Raises Tariffs on Tobacco and Alcoholic Beverages

President Muhammadu Buhari has approved the upward review of excise duties payable on tobacco. The basis for calculating excise duty on alcoholic beverages was also changed. These changes will take effect in June 2018 thus giving manufacturers a 90-day window to prepare for the increases/changes. The new duties will be spread over 3 years starting from 2018 to 2020 to cushion their impact on prices.

Tobacco

For Tobacco, the Government will maintain the current ad-valorem rate of 20 per cent and introduce additional specific rates spread over three years.

In addition to the current 20 per cent ad-valorem rate, each stick of cigarette will attract a ₦1 specific rate per stick (₦20 per pack of 20 sticks) in 2018, ₦2 specific rate per stick (₦40 per pack of 20 sticks) in 2019 and ₦2.90k specific rate per stick (₦58 per pack of 20 sticks) in 2020.

Alcoholic beverages

For alcoholic beverages, the current ad valorem rate will be scrapped and replaced with specific rates also spread across 3 years.

Under the new regime, Beer & Stout would attract ₦0.30k per centiliter (cl) in 2018 and ₦0.35k per cl each in 2019 and 2020.

Wines would attract ₦1.25k per cl in 2018 and ₦1.50k per Cl each in 2019 and 2020. Spirits would attract ₦1.50k per cl in 2018, ₦1.75k per cl in 2019 and ₦2.00k per cl in 2020.

Justification for the review

In addition to controlling the consumption of these goods due to their perceived social costs and raising revenues, the Minister for Finance also noted that a peer review of excise duties for comparable countries showed that Nigeria was lagging in excise rates. Thus, this review was necessary to align excise rates in Nigeria with those of other countries particularly ECOWAS member states.

For more information contact:

Maxwell Ukpebor, Samuel Esuga, Olumayowa Oluwole
Adebiyi Tax & Legal
House 20 Wema Terrace
Udi Street Ikoyi
Lagos

info@adebiyitaxandlegal.com

+234 803 960 0520

This Legal Alert contains information on tax /legal issues. It does not constitute legal or professional advice on such issues. Where specific legal advice is needed, the services of a solicitor/tax adviser should be sought.

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