FG introduces new taxes on beer, imported vehicles, and plastics (2023 FPM and Tariff Amendments)

The Federal Government has introduced a new set of taxes on beer, imported vehicles, and single-use plastics.

This disclosure is contained in a circular (HMFBNP/MDAs/circular/2023FP/04) issued by the Federal Ministry of Finance Budget and National Planning, FMFBNF to all Ministries, Departments, and Agencies on April 20, 2023, informing them of the new developments.

Read Also: 2023 Revised Import Prohibition List: Trade Items Banned from being imported into Nigeria

The circular titled “Approval for the Implementation of the 2023 Fiscal Policy Measures and Tariff Amendments “ revealed that under the newly introduced taxes, the Federal Government will charge N75 per litre of beer or stout imported into Nigeria.

According to the Minister of Finance, Zainab Ahmed, N75 per litre will be charged on “beer and stout including all alcoholic beverages and beer not made from malt-whether fermented or not fermented” in 2023.

This new excise duty on beer and stout will be increased to N100 per litre in 2024.

Before the new rates, the government taxed imported alcoholic beverages using valorem rates- levying of tax or customs duties) proportionate to the estimated value of the goods or transaction concerned. Now there is a specific rate, not an estimate.

The same excise rate for beer will be applied to the importation of wine.

Under the tax laws, two-litre engine vehicles will attract an Import Adjustment Tax (IAT) of two percent while vehicles with four-litre engines and above will attract a four percent IAT with effect from 1 June 2023.

The Federal Government also introduced a Green Tax by way of excise duty on Single Use Plastics (SUPs) including plastic containers, films, and bags at the rate of 10 percent.

An Import Adjustment Tax (IAT) levy has been introduced on motor vehicles of 2000 cc to 3999 cc at 2 percent while 4000 cc and above will be taxed at 4 percent.

With effect from 1st June 2023, “vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles are exempted”.

The circular put to rest the matter of the imposition of a five percent excise duty on telecommunication services introduced via the Finance Act 2020 and prescribed in the Official Gazette No. 88, Vol. 109 of 11 May 2022 approved by the President.

Going forward, the five percent tax will apply to mobile telephone services (GSM), fixed telephone, and internet services- postpaid and prepaid.

Under the Supplementary Protection Measures (SPM) as it relates to the implementation of the ECOWAS Common External Tariff 2022-2026, the circular stated that the changes are effective from 1 May 2023 subject to a 90-day grace period for importers who had opened Form M before 1 May 2023.

Items on the list include rice, woven fabrics, ceramics tiles and sinks, steel, containers for compressed or liquified gas, aluminum cans, washing machines, electric generating sets and rotary converters, smartphones, new and used passenger motor vehicles, and electricity meters.

The applicable duties for most of the items are unchanged from the 2022 FPM rates.

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See also 2023 FPM and Tariff Amendments.