Tinubu suspends Finance Act, halts 5% excise tax on telecoms

In a bid to curb multiple taxations as complained by a cross-section of Nigerians and the business community, President Bola Tinubu has signed four Executive Orders, which include the suspension of the five per cent Excise Tax on telecommunication services as well as the Excise Duty escalation on locally manufactured products.

The President also suspended the 2023 Finance Act 2023 deferring the date of its commencement from 28th May, 2023 to 1st of September, 2023.

Some of the suspended taxes were issued through Executive Orders by former President Muhammadu Buhari at the twilight of his administration.

They include Corporate Income tax, Import duties, Export duties, Excise duties, Rents, Capital Gains tax, Personal Income tax, Value Added tax, Stamp duties, Property tax, Licenses, Motor Parking fee, Motor Vehicle fee, Withholding tax, Land tax, Market License fee, Road tax, Business Premises, dividend tax, NHIS levy, Advert fee, Regulation fees, the new NYSC levy.

The Special Adviser to the President on Special Duties, Communications and Strategy, Dele Alake, disclosed this while briefing State House correspondents on Thursday at the Presidential Villa Abuja.

According to him, some of the tax policies are being implemented retroactively with their commencement dates, and in some instances, pre-dating the official publication of the relevant legal instruments backing them.

Alake had led the members of the administration’s Revenue Team to brief State House newsmen at the Presidential Villa, Abuja.

Others on the team were Special Adviser to the President on Revenue, Mr Zacc Adedeji; Ms Doris Aniettie, a member of the Presidential Advisory Council on Finance and other Related Matters; Adenike Laoye, from the Office of the Chief of Staff to the President

He said President Tinubu also signed the Finance Act (Effective Date Variation) Order, 2023, which now defers the commencement date of the changes contained in the Act from May 23, 2023 to September 1, 2023.
He explained that this is to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.

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

He said, “The second one is the Customs, Excise Tariff (Variation) Amendment Order, 2023, which shifts 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 other Executive Order signed by the president suspends the 5% Excise Tax on telecommunication services as well as the Excise Duties escalation on locally manufactured products.

“The last Executive Order also suspends the newly introduced Green Tax by way of Excise Tax on Single Use Plastics, including plastic containers and bottles.

“Tinubu also ordered the suspension of Import Tax Adjustment levy on certain vehicles.”

Alake explained that this is in the president’s commitment to creating a business-friendly environment.

He said: “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. His Excellency will not exacerbate the plight of Nigerians.”

According to him, President Tinubu’s intention is to listen to the concerns of the Nigerian people and alleviate the negative impacts of the tax adjustments, rather than exacerbate the challenges faced by the citizens.

He further explained that the decision is in fulfilment of President Tinubu’s promise to address business unfriendly fiscal policy measures and multiplicity of taxes.

‘President committed to reviewing complaints about multiple taxes’

He reiterated the President’s commitment to reviewing complaints about multiple taxation, local and anti-business inhibitions.

He assured that the Tinubu administration will continue to give requisite stimulus by way of friendly policies to allow businesses to flourish in the country.

He said the l President assured Nigerians that there will not be further tax raise without robust and wide consultations undertaken within the context of a coherent fiscal policy framework.

He said: “in closing, the President wishes to reiterate his commitment to reviewing complaints about multiple taxation, and anti-business inhibitions. The Federal Government sees business owners, and local and foreign investors as critical engines in its focus on achieving higher GDP growth and an appreciable reduction in the unemployment rate through job creation.

“The government will, therefore, continue to give requisite stimulus by way of friendly policies to allow businesses to flourish in the country.

“President Bola Tinubu wishes to assure Nigerians by whose sacred mandate he is in power that there will not be further tax raise without robust and wide consultations undertaken within the context of a coherent fiscal policy framework.”

According to him, some of the problems identified with the tax changes include the 2017 National Tax Policy approved by President Muhammadu Buhari’s administration, prescribing a minimum of 90 days’ notice from the 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.

‘Businesses face rising costs’

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

He also noted the Excise Tax increases on tobacco products and alcoholic beverages from 2022 to 2024, which had already been approved, are also being implemented.

The Presidential spokesman maintained that 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.

“In his inaugural speech, His Excellency, President Bola Ahmed Tinubu promised to address business unfriendly fiscal policy measures and Prultiplicity of taxes.”

He explained that it was in fidelity to the pledge to put Nigerians at the centre of government policies that President Tinubu signed the executive orders.

Reacting to a question on whether the President’s action would affect the Petroleum Tax and if new taxes would be introduced, the Special Adviser on Revenue, Mr Adedeji, said that the intent of the President was to lighten tax burdens, harmonise and manage already existing taxes in the best interest of Nigerians.

“As you rightly said that there’s a plan or possibly proposal for Petroleum Tax, if you look at the current price templates, that has already been included, so this suspension has nothing to do with that. So the pricing structure that you have for PMS today, all those have been included, there are no new taxes that we’re bringing in.

“Like my colleague has said, one of the key focuses of this administration is to harmonise our taxes, the way we collect it. Mr. President actually wants to simplify and make it friendly to business, the way we operate taxes in Nigeria. As we know, when we talk about revenue management, it’s not only in tax collection, the starting point is our economic policy because our aim is not to tax poverty.

“Our aim is not to tax production. Our aim is to increase our productive activities, and capacity to produce, then we can tax our consumption and that is the direction of our economic planning and then we want to increase the trust that we have in the government. If you have observed what has happened in the last months that we’ve been here, we’ve kept our words, part of what we are doing today, just to increase this trust that we’re here to do what’s best for the country.

“Lastly is that we have a robust plan to improve our collection management, the compliance management, because that is what is needed. So we’re not going to impose new taxes, it’s the one that have that we’ll improve the collection, the management and the efficient use of those resources.

“That is the pledge and promise of Mr President, which we’re here to make sure comes to reality,” he said.
Reacting to a question on whether the President’s action would affect the Petroleum Tax and if new taxes would be introduced, the Special Adviser on Revenue, Mr Adedeji, said that the intent of the President was to lighten tax burdens, harmonise and manage already existing taxes in the best interest of Nigerians.

“As you rightly said that there’s a plan or possibly proposal for Petroleum Tax, if you look at the current price templates, that has already been included, so this suspension has nothing to do with that. So the pricing structure that you have for PMS today, all those have been included, there are no new taxes that we’re bringing in.

“Like my colleague has said, one of the key focuses of this administration is to harmonise our taxes, the way we collect it, Mr. President actually wants to simplify and make it friendly to business, the way we operate taxes in Nigeria.

‘’As we know, when we talk about revenue management, it’s not only in tax collection, the starting point is our economic policy, because our aim is not to tax poverty.

“Our aim is not tax production. Our aim is to increase our productive activity, and capacity to produce, then we can tax our consumption and that is the direction of our economic planning and then we want to increase the trust that we have in the government.

If you have observe what has happened in the last months that we’ve been here, we’ve kept our words, part of what we are doing today, just to increase this trust that we’re here to do what’s best for the country.

‘Govt not planning new taxes’

“Lastly is that we have a robust plan to improve our collection management, the compliance management because that is what is needed. So we’re not going to impose new taxes, it’s the one that has that we’ll improve the collection, the management and the efficient use of those resources.

“That is the pledge and promise of Mr. President, which we’re here to make sure comes to reality”, he said.

We‘re excited by the executive orders—NECA

The Nigeria Employers’ Consultative Association, NECA, has expressed excitement over President Tinubu’s Executive Orders suspending telephone tax and deferring the implementation of Finance Act and Customs tariff.
Reacting to the development, Director-General of NECA, Mr. Adewale-Smatt Oyerinde, lamented that the issue of multiplicity of taxes has become a major challenge to organized businesses in the country, pleading the President to go beyond the definitive pronouncements, but to also reconsider the Value Added Tax, VAT, imposition on Automated Gas Oil, AGO, among some other urgent interventions..

He stated: “NECA commends the Federal Government for the four new Executive Orders. The Association by the new Executive Orders appreciates the movement of the commencement date of the Financial Act 2023 from May 28, 2023 to September 1, 2023 to reflect the 90 days minimum advance notice for tax changes in line with provisions of the 2017 National Policy via The Finance Act (Effective Date Variation) Order, 2023; the deferment of the commencement of implementation of the Customs, Excise Tariff 2023 to August 1 2023 from March 27 2023 also to reflect the advance notice for tax changes as provided by the 2017 National Policy via the Customs, Excise Tariff (Variation) Amendment Order, 2023; the suspension of the five percent Excise Tax on telecommunication services and the Excise Duties escalation on locally manufactured products; and the suspension of the nascent Green Tax by way of Excise Tax on Single Use Plastics (SUPs) including plastic containers and bottles, and the suspension of Import Tax Adjustment levy on certain vehicles.

“The issue of multiplicity of taxes has become a major challenge to organized businesses in the country.

Currently businesses are made to pay over fifty different taxes and sundry charges, among which are: Corporate Income tax, Import duties, Export duties, Excise duties, Rents, Capital Gains tax, Personal Income tax, Value Added tax, Stamp duties, Property tax, Licenses, Motor Parking fee, Motor Vehicle fee, Withholding tax, Land tax, Market License fee, Road tax, Business Premises, dividend tax, NHIS levy, Advert fee, Regulation fees, the new NYSC levy as well as the regular user charges such as electricity, water, disposal fee, etc.

This huge tax burden, no doubt, has been a clog in the wheel of overall performance of organized businesses over the years. We had, at numerous fora expressed concern on the escalation of taxes including exercise duties and its adverse implication on the business operating environment.

“We are indeed elated with the news of the Executive Orders, particularly with the suspension of the five percent Excise Tax on telecommunication services; suspension of Excise Duties on Tobacco (30 percent ad valorem rate with the introduction of specific rate of NGN 4.2/stick of cigarette for 2022; N4.7 per stick for 2003; and N5.2/stick in 202); Beer (N40/lite in 2002; N45/lite in 2023 and N50/lite 2024); and Wine/Spirit (20 percent ad valorem rate with a specific rate of N50/litre in 2022) as proposed in the 2022 Fiscal Policy Statement.

“The suspension of 10 percent Green Tax by way of Excise Tax on Single Use Plastics, SUPs, including plastics containers and bottles; Import Tax Adjustment, IAT, of two percent on imported motor vehicles of 2000 cc to 3999 and percent on 4000 cc engines. “The new Orders will no doubt, support the efforts at improving the operating environment and mitigate the high cost of doing business in Nigeria, particularly with the aftermath of the removal of fuel subsidy.

“Furthermore, and in view of consolidating the gains that these interventions would facilitate, NECA urges that beyond the definitive pronouncements of the President, we urge His Excellency to also reconsider the VAT imposition on Automated Gas Oil, AGO, among some other urgent interventions. The reversal of the VAT will in no small measure ameliorate the escalating cost of energy and transportation cost currently being witnessed. As a follow-up action, we urge Government to: Publish the list of approved harmonized taxes and levies by the Joint Tax Board, JTB, to address the issues of multiples taxes and levies; Design and Implement measures that would draw informal sector businesses to the formal sector so as to widen the tax net for increased tax revenue.”

It’ll relieve Nigerian businesses of undue burden —NACCIMA

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, has welcome the suspension of the taxes, noting that it will ensure that Nigerian businesses are relieved of undue burden.

In his reaction, National President, NACCIMA, Dele Kelvin Oye, said: “We appreciate the administration’s commitment to ensuring that Nigerian businesses are not unduly burdened by unfavourable policies.

“We note that the tax changes were intended to raise revenue while addressing important public health and environmental concerns. However, the lack of adequate notice and clarity on the implementation of the changes has resulted in significant challenges for affected businesses, including rising costs, falling margins and capacity underutilization.

“We commend the decision by President Bola Ahmed Tinubu to sign executive orders deferring the commencement of the tax changes as contained in the Finance Act and Customs, Excise Tariff (Variation) Amendment Order. We also support the suspension of the 5% Excise Tax on telecommunication services, the Excise Duties escalation on locally manufactured products, the Green Tax on Single-Use Plastics, including plastic containers and bottles, and the Import Tax Adjustment levy on certain vehicles.

“We urge the Federal Government to continue to engage with stakeholders and implement policies that are business-friendly and promote sustainable economic growth. We believe that the private sector is essential to achieving the government’s goal of higher GDP growth and reduced unemployment rate through job creation.”

Tinubu pursuing market economy —Adonri

In his own comment, David Adonri, Vice Executive Chairman, HIGH CAP Securities Limited, said : “I don’t have details yet on these reversals. However, President Buhari was known for acting because of parochial reasons rather than for the national interest. So far, President Tinubu is pursuing an economic crusade for a market-dominated economy that favours investment. No doubt, it will help reduce some cost of production and moderate rising inflation.”

It will enhance the business environment, ease of doing business —Prof Uwaleke

Reacting to the development, Prof Uche Uwaleke, President, Association of Capital Market Academics of Nigeria, ACMAN, said: “The recently signed Executive Orders represent a welcome development as they will no doubt enhance the business environment and consequently improve the country’s ranking in the Ease of Doing Business.

The suspension of the proposed import tax adjustment levy on certain vehicles and the Excise tax on telecommunications and other locally manufactured products will help to moderate the rising inflation and increase productivity.

“Also, the Finance Act Variation Order 2023 is equally in order to enable taxpayers adjust to the new provisions in line with the National Tax Policy.

“Much as these developments will help moderate rising the inflation, more measures with direct impact on the population need to be put in place in order to significantly ameliorate the adverse consequences of the fuel subsidy removal. These should include the immediate roll out of palliatives promised by the government.”

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