President Bola Tinubu recently signed Four (4) Executive Orders deferring and suspending the commencement of certain taxes paid by individuals and companies in the country. Here are a few things you need to know and what it means to every Nigerian:
- The first Executive Order is the Finance Act (Effective Date Variation) Order, 2023 whichdefers the commencement date of the changes contained in the Act from May 23, 2023 to September 1, 2023 to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy. This means that some of the major changes outlined in the Finance Act like an increase in the rate of tertiary education tax from 2.5 percent to 3 percent, elimination of double VAT on goods purchased from a non-resident supplier, 0.5 percent levy on goods imported outside of Africa into Nigeria will not take effect till the 1st of September.
- The second Executive Order is the Customs, Excise Tariff (Variation) Amendment Order, 2023, which deferred the commencement date of the tax changes from March 27, 2023 to August 1, 2023, also in line with the National Tax Policy. This means that the proposed increase in excise duties on alcoholic beverages, tobacco and cigarettes will be put on hold until August 1, 2023. This order also affects the introduction of an excise duty of N10 per litre on aerated water.
- The third Executive Order is the suspension of the five per cent (5%) Excise Tax on telecommunication services as well as Excise Duties escalation on locally manufactured products. This will help address the issue of multiple taxation in the telecommunication sector.
- The fourth executive order is the suspension of the newly introduced Green Tax by way of Excise Tax on Single Use Plastics, including plastic containers and bottles. This order alsosuspends the Import Tax Adjustment levy on certain vehicles which means Nigerians will no longer have to pay more for the importation of some vehicles and shows the government’s commitment to creating a business friendly environment.
- The Four (4) Executive Orders addresses the concerns of Nigerians to alleviate the negative effects of tax adjustments, rather than worsen the challenges faced by citizens.
- The Executive orders are in line with Government’s #RenewdHope Agenda and reiterates the Administration’s commitment to reviewing complaints about multiple taxation, local and anti-business inhibitions.
- The Executive Orders brings to the fore Government’s focus on achieving higher GDP growth and appreciable reduction in unemployment rate through job creation using Business owners, local and foreign investors.
- This deferments of taxes is also in line with global practice with a view to giving taxpayers and businesses reasonable time to adjust to the new tax regime as both the Finance Act 2023 and the Customs, Excise Tariff Order 2023 did not give the required minimum notice period, thus putting businesses in violation of the new tax regime even before the changes were gazetted.
- The new Executive Orders will also support the efforts of Government to improve the operating environment and mitigate the high cost of doing business in Nigeria, particularly in the aftermath of the removal of fuel subsidy.