Nigeria Imposes Sugar Tax on Non-Alcoholic Carbonated Drinks

On Wednesday, January 5, 2021. The Minister of Finance, Budget and National Planning- Mrs. Zainab Ahmed announced that the Federal Government of Nigeria has introduced an excise duty of N10 per litre on all non-alcoholic, carbonated drinks in Nigeria. The tax referred as ‘Sugar Tax’, is contained in the Finance Act which was signed into law by President Muhammadu Buhari on December 31, 2021, alongside the 2022 Appropriation Bill.

In a statement by the Minister, she explained that the excise duty of N10 per litre imposed on all non-alcoholic and sweetened beverages is “ to discourage excessive consumption of sugar in beverages which contributes to a number of health conditions including diabetes and obesity. But it is also used to raise excise duties and revenues for health-related and other critical expenditures. This is in line also with the 2022 budget priorities.”

Consequently, members of the Manufacturers Association of Nigeria (MAN) are expressing their displeasure against the Sugar Tax. In a report published by Punch, MAN warned that a new tax imposed on carbonated drinks would be counter-productive. The report, titled ‘key considerations against excise on non-alcoholic beverages’, projected that the government might collect N81bn revenue from excise duty on carbonated drinks between 2022 and 2025, but lose N197bn within the same period from other taxes, such as Value Added Tax and Company Income Tax from the manufacturers of soft drinks.

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