In a bid to alleviate the tax burden on Nigerians and their businesses, President Bola Tinubu has signed four executive orders suspending some taxes.
The president’s action is in response to concerns raised by manufacturers and other stakeholders regarding recent tax changes.
This is as private sector operators in the manufacturing, telecommunications, maritime sectors have unanimously commended the federal government for amendments to the tax regime in the country.
Special adviser to the president on special duties, communication and strategy, Dele Alake, who led members of the administration’s revenue team, disclosed this to State House correspondents at the Presidential Villa, Abuja, yesterday.
According to the team, the move became necessary as a response to the need for clarity and adequate notice for tax adjustments, as specified in the 2017 National Tax Policy.
According to Alake, the first executive order is The Finance Act (Effective Date Variation) Order, 2023, which has now deferred the commencement date of the changes contained in the Act from May 23, 2023 to September 1, 2023 to ensure adherence to the 90-day minimum advance notice for tax changes as contained in the 2017 National Tax Policy.
The second order is The Customs, Excise Tariff (Variation) Amendment Order, 2023 which has also shifted the commencement date of the tax changes from March 27, 2023 to August 1, 2023 and also in line with the National Tax Policy.
Thirdly, Alake said, the president had given an order suspending the 5% excise tax on telecommunication services as well as the excise duties escalation on locally manufactured products.
Fourthly, he said, the president has ordered the suspension of the newly introduced Green Tax by way of excise tax on single use plastics, including plastic containers and bottles.
He added that the president had ordered the suspension of Import Tax Adjustment levy on certain vehicles.
According to him, some of the problems identified with the tax changes include the 2017 National Tax Policy approved by the President Muhammadu Buhari administration, prescribing a minimum of 90 days’ notice from government to tax-payers before any tax changes can take effect.
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.
Alake 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.
He recalled that in his inaugural speech, President Tinubu had promised to address the issue of multiple taxation and other business-unfriendly fiscal policy measures.
Meanwhile, economic experts have commended President Tinubu’s variation of the 2023 Finance Act, with some describing it as a draconian policy document that was introduced to carelessly raise prices of locally manufactured food and non-food items by the previous administration.
Aside suspending implementation of the Finance Act 2023, the experts say the suspension of five percent communication tax and vehicle tariff are capable of removing the burden of multiple and increased taxation on Nigerian taxpayers.
Economic analyst Okey Inuegbu said: “A lot of the provisions in the Finance Act are draconian. Government has been using it to increase prices of many items that are targeted by some of its provisions.”
He added, however, that the suspension of the Finance Act will not delay implementation of the 2023 budget.
The suspension of the Finance Act implies that the federal government will not apply the Act to the part of the national budget. It will now take individual items and implement until September. If the Finance Act will affect the budget, the president will not allow it until he is able to do so from September, 2023.
Inuegbu held that the best way to raise more money is to reduce tax burden.
Also, professor of finance and capital market in Nasarawa State University, Uche Uwaleke, said the four Executive Orders will no doubt enhance the business environment and consequently improve the country’s ranking in the Ease of Doing Business.
Professor Uwaleke said: “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,” Uwaleke stated.
On his part, the president of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Oye, welcomed the recent interventions by the federal government on some recent tax changes.
He said, “We appreciate the administration’s commitment to ensuring that Nigerian businesses are not unduly burdened by unfavourable policies.
On his part, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, said the decision of the president is commendable, as it shows that the presidency is very sensitive to the complaints of investors, especially manufacturers.
Yusuf pointed out that since the withdrawal of fuel subsidy, there has been a clamour for the government to put some measures in place as part of the total package to mitigate the pains and challenges of the fuel subsidy removal.
Speaking in similar vein, the director-general of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir said the president’s action was a positive one and in line with the concern that has been shown by stakeholders
According to him, apart from the fact that it was passed without adequate stakeholder engagement, several of the provision are also against businesses especially manufacturers.
“We are well pleased that the issue has been addressed as this will give time for proper engagement with government and see how we can work around the policy by the previous government,” he said.
The Africa tax leader at PricewaterhouseCoopers (PWC), Taiwo Oyedele also applauded the latest move by the president, saying it is a good development that sends a positive signal to the business community.
Noting that manufacturers have been having a rough time under a burdensome tax regime imposed on them without notice, Oyedele said the latest executive orders by the president would ease some of these burdens.
Also commenting on the matter, senior associate, Parthian Partners, Marvellous Adiele, said most businesses will benefit from the latest development especially as it will reduce cost of doing businesses for the time being and increase their profitability.
Dealers, Clearing Agents Applaud Suspension Of Levy On Tokunbo, New Vehicles
Vehicle dealers and clearing agents operating at the nation’s seaports have applauded President Bola Tinubu, for signing an executive order suspending the implementation of Import Tax Adjustment (ITA) levy on imported used and new vehicles.
LEADERSHIP reports that the administration of ex-President Muhammadu Buhari had signed into law a new tax regime where imported vehicles with 2000cc (2 litres) to 3999cc (3.9 litres) engine will pay an additional charge known as IAT levy of two per cent of the value of the vehicle while vehicles with 4000cc (4 litres) and above engines will attract IAT of four per cent of their value.
The new levy was in addition to the 35 per cent import duty and 35 per cent levy paid by importers of vehicles.
In an exclusive chat with LEADERSHIP, the president, United Berger Motor Dealers Association (UNBMDA), Metche Nnadiekwe, said the suspension of the tax law will come as a relief for car dealers across the country.
He said, “It is a welcome development. Car dealers are suffocating, and there have been reduction in vehicle purchases since the implementation of this law. The President has done well by suspending this law because it is against the people.”
“The implication of the tax is numerous because there is no way it won’t be added to the cost of selling vehicles at the end of the day.”
IT Experts Applaud FG On Suspension Of 5% Excise Duty On Telecom Services
Also, stakeholders in the telecom sector have applauded the federal government on the suspension of the five per cent excise duty on telecom sector.
The national president, National Association of Telecoms Subscribers (NATCOMS), Chief Adeolu Ogunbanjo told LEADERSHIP that the suspension of the five per cent excise duty on telecom sector is a cheering news.
He, however stated that this is the first step, adding that the federal government must take a step further in ensuring that the law is amended, adding that the case is still in court.
“This is the first step and we applaud the federal government for this stride. However, the second step is for the president to present the law to the National Assembly, for amendment. Recall that the five per cent excise duty bill is already an act of parliament. The president has done well by suspending it. We are still continuing with our case, as it is not over. The case is already in court,” the national president explained.
On his part, the head, operations, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbolahan Awonuga, urged the President to ensure that he appoints the right person to man the ministry of Communications and Digital Economy.
“Mr President should appoint someone who knows the sector very well. It should not be a game of politics. Otherwise, the gains recorded in the sector would be reversed,” he said.
Speaking to LEADERSHIP yesterday, the president of the Association of Telecommunications Companies of Nigeria (ATCON), Tony Izuagbe Emoekpere, said the president’s action will unlock the potential in the industry and add value to the Nigerian economy.
“It will also help the consumer who would have borne the brunt of the excise duty that would have been transferred to them. This would further make the climate conducive for more foreign investment and even local investment,” he said.
