IN accordance with the notice by Minister of Finance, Mrs Kemi Adeosun in March, new excise duty rates for alcoholic beverages and tobacco takes effect from Monday, 4th June 2018.
In a statement from Adeosun’s office on Sunday, President Muhammadu Buhari gave the approval for the hike in line with the Economic Community of West African States (ECOWAS) directive on the harmonisation of member-states’ legislation on excise duties.
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.
There is, however, no increase in excise duty of other locally excisable products.
The Minister 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 upward review of the excise duty rates for alcoholic beverages and tobacco was to achieve a dual benefit of raising the Government’s fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse.
Following the President’s approval, Adeosun 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.
The Minister added that “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.”
Regarding tobacco, the finance minister noted that “the Government will maintain the current ad-valorem rate of 20 per cent 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 per cent 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 per cent of the price of the most sold brand, as against 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in Gambia.
The new specific excise duty rate for alcoholic beverages cuts across Beer and Stout, Wines and Spirits for the three years 2018 to 2020.
Under the new regime, Beer and 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.
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