President Bola Tinubu has signed three executive orders to address the negative impacts of tax adjustments on businesses and households in affected sectors, according to Mr. Dele Alake, Presidential Adviser on Special Duties, Communications, and Strategy. The orders specifically affect the Finance Act 2023, the Customs, Excise Tariff, and the Excise Tax on telecommunications, as well as the Green Tax.
The first order, the Finance Act (Effective Date Variation) Order, 2023, defers the implementation of changes in the Act from May 23, 2023, to September 1, 2023, ensuring adherence to the 90-day notice period for tax changes as stated in the 2017 National Tax Policy. The second order, the Customs, Excise Tariff (Variation) Amendment Order, 2023, shifts the commencement date of tax changes from March 27, 2023, to August 1, 2023, aligning with the National Tax Policy.
Additionally, President Tinubu has suspended the 5% Excise Tax on telecommunication services and the Excise Duties escalation on locally manufactured products. Furthermore, the newly introduced Green Tax, specifically the Excise Tax on Single Use Plastics such as containers and bottles, has been suspended. The President has also suspended the Import Tax Adjustment levy on certain vehicles.
Tinubu's administration aims to ease the lives of Nigerians and support corporate entities despite the challenges they face. The President acknowledges that certain tax adjustments were implemented retroactively without sufficient notice, leading to implementation difficulties. However, the underlying purpose of these tax adjustments is to raise revenue and address environmental and health concerns.
The 2017 National Tax Policy requires a minimum notice period of 90 days for taxpayers before tax changes can take effect. The Finance Act 2023 and the Customs, Excise Tariff Order 2023 did not meet this requirement, resulting in businesses being in violation of the new tax regime even before the changes were officially gazetted. This has caused financial strain, falling margins, and underutilization of capacity for affected businesses, compounded by macroeconomic challenges and the impact of the Naira redesign policy.
Tinubu emphasizes that while the approved Excise Tax increases on tobacco products and alcoholic beverages from 2022 to 2024 are being implemented, further escalation of these rates by the current administration creates policy inconsistency and uncertainty for businesses operating in Nigeria. The controversial 5% Excise Tax on telecommunication services and the imposition of multiple taxes on the sector have also generated concerns. Moreover, the Green Taxes, including the Single Use Plastics tax and the Import Adjustment Levy on specific vehicle categories, require more consultation and a holistic approach to the country's net-zero plan to avoid negative impacts on the economy.
Tinubu's inaugural speech promised to address business-unfriendly fiscal policies and multiple taxation. These executive orders aim to alleviate the negative impacts of tax adjustments on businesses and households in affected sectors. Tinubu reaffirms his commitment to reviewing complaints about multiple taxation, local business inhibitors, and creating a favorable environment for businesses to thrive in Nigeria.
“The Federal government sees business owners, local and foreign investors as critical engines in its focus on achieving higher GDP growth and appreciable reduction in unemployment rate through job creation.
“The government will, therefore, continue to give requisite stimulus by way of friendly policies to allow businesses to flourish in the country.”
He assured Nigerians that there would not be further tax raise without robust and wide consultations undertaken within the context of a coherent fiscal policy framework.
