Excise Duty or tax is a tax on goods manufactured within Nigeria and payable by the manufacturers before the goods are removed from the factories or warehouses.
The duty is payable on all manufactured or produced goods unless the goods are exempted from duty. For manufacturers, the tax is simply the cost of doing business. Excise duty is based on the cost of production multiplied by the relevant excise duty rate.
Excise Tariffs are duties or taxes imposed by government on selected imported commodities in order to restrict imports and conserve foreign exchange. Tariffs are also the amount a country needs to pay for trading products.
Tariffs may be levied either to raise revenue or to protect domestic industries. It is more beneficial to a country’s economy because the amount paid for its product raises the country’s GDP.
Bases For Imposing Tariffs;
- To protect infant industries
- To prevent dumping
- To correct an adverse balance of payment
- To restrict the importation of demerit or harmful goods thereby regulating the consumption
- To encourage the production of goods of strategic importance
- As a means of raising revenue
Goods Liable To Excise Duty;
- Beer & Stout
- Cigarettes and Tobacco
- Goods manufactured and sold in Nigeria
Due Date For Payment
Excise duty computed is payable immediately on manufacture of excisable products. The Board may however exercise its discretion to allow the duty to be payable on a later stage not later than the delivery of the goods from the products store.
Legislative Framework For Excise Duties
Custom duties are applied to imported and exported products. These taxes are administered by the Nigerian Customs Service and are regulated by the following Laws in Nigeria;
- The constitution of the Federal Republic of Nigeria
- Customs and Excise Tariff etc (Consolidation) Act 1995 as amended
- Nigeria Customs Service Board Act
- Excise (Control of Distillation) Act
- Improper record keeping
- Manufacturing products without excise license
- Excess or deficiency in product stock
- Unlawful manufacture of goods liable to excise duty
Penalties vary depending on the type of products liable to excise duty. Penalties include fines, forfeiture of products, forfeiture of equipment and materials used in the manufacture of products and imprisonment.
The Finance Act (FA) 2020 And Its Implication On The Customs And Excise Tariff Act
The Finance Act 2020 provides amendments to the Customs and Excise Tariff Act in order to encourage domestic industries. Based on the Finance Act 2020 provisions, excise duties will now apply to excisable goods, such as cigarettes, wines, spirit, beer, and stout, among others, only when they are imported into Nigeria. Specific domestically produced items are subject to excise duties at definite rates. These domestic products include tobacco, spirits, and alcohol. Other items in the schedule of excisable products but now exempted and no longer apply include perfumes, cosmetics, toilet papers, non-alcoholic beverages, telephone recharge vouchers, soaps and detergents, paper packaging, spaghetti, and noodles, amongst others.
Excise duties on telecommunication services: telecommunication services provided in Nigeria will now attract excise duties at the rate prescribed by the President.
Excise duty is imposed on goods to discourage their demand and consumption. While it is apt that the government needs to explore other non-oil revenue sources to generate the funds needed to finance the national budget, necessary caution should be taken, considering the adverse effect of any additional tax or levy on businesses and individuals.