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New tax on carbonated drinks: The time is not apt ~ Blakey Okwudili Ijezie.

By Kachimsimerem Mezie-Akabudu, January 6, 2022.

• Nigerians to pay VAT on digital service

Chief Blakey Okwudili Ijezie, Managing Partner and CEO of Okwudili Ijezie and Co, a tax consultant and internally generated revenue expert, has advised the federal government to jettison the idea of taxing soft drinks consumption in the country.

Ijezie while speaking with newwavereporters.com, said that the introduction of the new tax regime will bring more hardship on the people, and will have a negative impact on the soft drink industry which will ultimately lead to loss of revenue by the government.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, during her public presentation of the 2022 budget on Wednesday in Abuja, said that the Federal Government is introducing an excise duty of N10 per litre on all non-alcoholic, carbonated and sweetened beverages starting from this year.

According to the minister, the new policy introduced is in the Finance Act signed into law by President Muhammadu Buhari on December 31, 2021.

She said, “There’s now an excise duty of N10 per litre 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.  But it is also used to raise excise duties and revenues for health-related and other critical expenditures.  This is in line also with the 2022 budget priorities.”

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Also, Ahmed said the government had introduced a law requiring foreign companies  providing digital services in the country to collect and remit Value Added Tax to the Federal Inland Revenue Service.

Ahmed said, the new policy is also 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 is 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.

Ijezie promised to make his opinion on the matter public in a media chat slated for Saturday the 8th of January, 2022.

 

 

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