Nigerians may have to brace for harder times as prices of both essential and compulsory goods and services are set to rise, Says, Zainab Ahmed, Finance, Budget and National Planning Minister.
Similarly, drinkers ofsoft drinks like Coca-Cola and Fanta, will have to pay higher as government has introduced an excise duty of N10/litre on all non-alcoholic, carbonated and sweetened beverages.Excise duty is a form of tax imposed on the production, licensing and sale of goods.
Purchasing power of Nigerians is at its lowest ebb and prices of food items are daily rising and Nigerians becoming impoverished.
But President Muhammadu Buhari says he is absolutely aware of the suffering and pains Nigerians go through to feed under his administration.
“The role of traditional rulers must not be undermined, because in their areas they know who is who, even by families, not to even talk of individuals,” he said.
The implication is that prices of carbonated drinks may spike across the country.
She said that the new policy is contained in Section 30 of the Finance Act which amended the provisions of Section 10, 31 and 14 on VAT obligations for non-resident digital companies.
The Minister said, “Section 30 of the finance act designed to amend section 10, 31 and 14 of VAT is in relations to VAT obligations for non-resident digital companies and the mechanism that will be used is to restrict VAT obligations mainly to digital non-resident companies who supply individuals in Nigeria who can’t themselves self-account for VAT.
“So if you visit Amazon, we are expecting Amazon to add VAT charge to whatever transaction you are paying for.
“I am using Amazon as an example. We are going to be working with Amazon to be agreed to be registered as a tax agent for the FIRS.
“So Amazon will now collect this payment and remit to FIRS and this is in line with global best practices, we have been missing out on this stream of revenue.
For clarification, the Minister said, the new law applies to foreign companies that provide digital services such as, “apps, high-frequency trading, electronic data storage, online advertising” among others.
Speaking further, Ahmed noted that in line with Section 4 of the Finance Act, non-resident companies are now expected to pay tax at 6 per cent on their turnover.
The Federal Government had in 2019 disclosed plans to tax foreign digital service providers offering services to Nigerians according to amended provisions in the 2020 Finance Act.
However, this is the first time the government is setting a specific tax rate.
Ahmed said, “Section 4 of the ACT which is taxation of e commerce businesses owned by non-resident companies on a fair and reasonable turnover basis has been set at 6 per cent.
“This provision empowers FIRS to access non-resident firms to tax on fair and reasonable basis of turnover and from digital services provided to Nigerian customers.”
She said the move was aimed at modernizing the taxation of Information Technology and the digital economy in line with current realities, adding that this is in conformity with the provisions of the National Development Plan 2021 – 2025.
Earlier in December 2021, Facebook, in a statement, disclosed that it will, from January 1, 2022, begin to charge VAT on the sale of advertisement to advertisers, regardless of whether they’re buying ads for business or personal purposes.
In 2020, Hameed Ali, comptroller-general of the Nigeria Customs Service (NCS), had proposed the collection of excise duty on soft drinks.
He had also put forward the same proposal in 2021 at an interactive session on the 2022-2024 medium-term expenditure framework (MTEF), organised by the house of representatives committee on finance.
Apart from the new ‘Sugar Tax’ in section 17, Ahmed said the 2021 finance Act also raised excise duties and revenues for the health sector.
The minister said the excise duty on soft drinks would discourage excessive consumption of sugar beverages which contributes to diabetes, obesity among others.
However, some health analysts believe that there are other sources of sugar intake, including alcoholic drinks, biscuits, buns, cakes, dairy products, and savoury food.
