FG imposes N10 tax on soft drinks, carbonated beverages

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The Federal Government has announced an additional N10 excise duty tax per liter of all non-alcoholic, carbonated, and sweetened beverages.

Minister of Finance, Budget and National Planning, Zainab Ahmed, said the tax was introduced to discourage intake of carbonated products like Coca-Cola, Pepsi, Sprite and other sweetened beverages that are associated with excessive sugar-related sicknesses like obesity and diabetes.

According to reports, about four million Nigerians suffer from diabetes linked to excess sugar consumption.

The minister made the disclosure today at the presentation of 2022 budget breakdown in Abuja. The new tax law is contained in the government’s 2021 Finance Act.

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.”

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.

According to her, 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.

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