Nigeria’s new excise regime: Is this the right time?

Barring any last minute reversal, locally manufactured tobacco and alcoholic beverages (“Excisable Products”) will be subject to a new excise regime from 4 June 2018. This new regime is pursuant to Section 13 of the Customs, Excise Tariff Etc. (Consolidation) Act which enables the Nigerian President to impose, vary or remove any import or excise duty.

The Federal Government of Nigeria (FGN) charges an indirect tax (Excise) on Excisable products which are goods considered harmful to the environment and public health/morals.

Under the new regime, Excise on alcoholic beverages will be charged on an ad-quantum basis (volume of production in centilitres multiplied by the applicable rates) as opposed to ad—valorem (based on ex- factory price of alcohol produced). For tobacco products, Excise will also be charged on an ad-quantum basis (number of sticks produced multiplied by the applicable rates), in addition to the existing ad-valorem Excise (based on ex-factory price of cigarettes/tobacco produced).

Preliminary analysis indicates a potential increase in Excise bills. This has generated diverse views on the impact and timing of the regime change. The proponents consider the change as overdue while opponents argue that it is ill—timed considering the current economic landscape.

On this premise it becomes imperative to understand the triggers for the change and thereafter evaluate its impact.

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