President Bola Tinubu has suspended the newly introduced Green Tax through Excise Tax on single-use plastics, including plastic containers and bottles.
The President has also signed an Executive Order suspending
the “5% Excise Tax on telecommunication services as well as the Excise Duties
escalation on locally manufactured products.”
Dele Alake, Special Adviser to the President on Special
Duties, Communications and Strategy, released a statement Thursday that Mr
Tinubu also ordered the suspension of the Import Tax Adjustment levy on certain
vehicles.
The statement noted that Mr Tinubu issued these orders to
ameliorate the negative impacts of the tax adjustments on businesses and
chokehold on households across affected sectors.
“His Excellency will not exacerbate the plight of
Nigerians,” he said.
The statement noted that the Tinubu Administration has since
noticed that some 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 in implementation,
Mr Alake said.
“Indeed, the intentions behind upward adjustments of some of
these taxes are quite noble. They were designed to raise revenue and address
environmental and health issues.
“However, they have generated significant challenges for and
elicited serious complaints amongst key stakeholders as well as in the business
community,” the statement said.
Based on the new 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 statement said.
Similarly, the president signed 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,” it said.
In an effort to entrench a robust and efficient tax system
in Nigeria, the National Tax Policy (NTP) was first published in 2012.
Four years later, former Finance Minister Kemi Adeosun, in
2016, set up a committee to review the policy to accommodate new strategies
that will complement the government’s objectives of creating an enabling
business environment and simple tax system.
Based on this, Nigeria’s Federal Executive Council (FEC) in
2017 approved the revised NTP, following recommendations of the NTP Review
Committee.
According to the former minister, the main objective is to
guide the operations of Nigeria’s tax system and provide clear implementation
and monitoring strategies for stakeholders in the system.
Challenges
On Thursday, Mr Alake noted that the government has
identified “some problems” in the tax changes.
He said the 2017 NTP prescribes a minimum of 90 days’ notice
from the government to tax-payers before any tax changes can take effect, but
it still needs to be complied with.
“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,” the statement said.
According to the statement, the 90 days notice is a global
practice with a view to giving taxpayers and businesses reasonable time to
adjust to the new tax regime.
Mr Alake said many affected businesses are already
contending with the rising costs, falling margins and capacity underutilisation
due to the various macroeconomic headwinds and the impact of the Naira redesign
policy.
While reiterating that Excise Tax increases on tobacco
products and alcoholic beverages from 2022 to 2024, which had already been
approved, are also being implemented, he said 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,” the statement said.
Mr Alake explained that the Green Tax, 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.
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