FG Imposes Tax on Carbonated Drinks
According to the Act, the excise duty of N10/litre imposed on all nonalcoholic, carbonated and sweetened beverages was to discourage excessive consumption of sugar in beverages which contributes to diabetes and obesity, among others.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, said the new ‘Sugar Tax’ was introduced to raise excise duties and revenues for health-related and other critical expenditures.
The affected products include Coca-Cola, Pepsi, Sprite and other sweetened beverages that are associated with excess sugar-related illnesses like obesity and diabetes.
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.
However, the Manufacturers Association of Nigeria have warned that new tax imposed on carbonated drinks would be counter-productive.
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