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FG Introduces N10/Litre Excise Duty On Non Alcoholic Drinks, 6% Tax On Digital Non-Resident Companies

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The Federal Government (FG) has announced the introduction of an excise duty of N10 per liter on all non-alcoholic, sweetened, and carbonated beverages. Excise duty is a type of tax imposed on the production and sale of goods.

This was disclosed by the Minister of Finance, Budget, and National Planning, Zainab Ahmed on Wednesday during the public presentation of the 2022 Appropriation Act.

Zainab said, “There’s now an excise duty of N10/liter imposed on all non-alcoholic and sweetened beverages, and this is to discourage excessive consumption of sugar in beverages which contributes to a number of health conditions including diabetes and obesity.

“This new sugar tax is introduced to raise excise duties and revenues for health-related issues and other critical expenditures. It is in line with the 2022 budget priorities.”

She also disclosed that e-commerce businesses of non-resident companies like Amazon, AliExpress, Twitter, and others would be taxed at 6 percent of turnover.

According to Zainab, “Let me note that such digital services include apps, high-frequency trading, electronic data storage, online advertising, and several others. The rationale for this is to modernize taxation of ICT and digital economy in line with current realities and this is in conformity with the provisions of the National Development Plan of 2021-2025.

“So if you visit Amazon as an example, we expect Amazon to add a Value Added Tax (VAT) charge to whatever transaction you are paying. We are going to be working with Amazon to agree to register as a tax agent with the Federal Inland Revenue Service (FIRS).

So Amazon would collect the payment and remit it to FIRS.

“This is in line with global best practice. They do not need to be registered companies in Nigeria, they just need an arrangement with FIRS where they collect VAT on behalf of FIRS and remit to FIRS.”

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