• Friday, June 21, 2024
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Suspension of tax increments averted threat to manufacturers – MAN

The Manufacturers Association of Nigeria (MAN) has said the suspension of the obnoxious aspects of the 2023 Fiscal Policy Measures is a welcome development to the manufacturing sector.

In a statement on Friday, Segun Ajayi-Kadir, director general of MAN, said the suspension of the taxes which arbitrarily imposed additional tax burden on the sector, obviates the looming existential threat on some sub-sectors in the manufacturing landscape.

“Manufacturers in the affected sector are pleased and we can now reconnect with our projections and plans made at the beginning of the year,” he said.

He added that the association expects the Customs Service to now stand down the requirements for compliance with the excise escalation and the registration for the green tax.

“It is therefore worthy of commendation that the President Bola Tinubu took due and far-sighted notice and consideration of the concerns.”

On Thursday, Tinubu signed four Executive Orders, postponing the enforcement of taxes on telecommunication services and alcoholic beverages and suspending the green tax, including the single use plastics tax and the import adjustment levy on certain categories of vehicles.

The Finance Act (Effective Date Variation) Order, 2023 defers the commencement date of the changes contained in the Act from May 28, 2023, to September 1, 2023.

In keeping with the trend of positive policy initiatives that we have seen with his administration, the four executive orders released yesterday have put paid to the anxieties of manufacturers in the affected sectors in particular and operators in the expansive value chain in general, according to MAN.

The association said going forward, it will continue to value fruitful dialogue and engagement with the government, with a view to improving the manufacturing environment in particular and the economy in general.

According to the 2023 Fiscal Policy Measures document signed in March by Zainab Ahmed, the former minister of finance, budget and national planning, the taxes to be paid by alcoholic beverage firms starting from June more than doubled.

Total specific rate for beer and stout, wines, spirits (per litre) was N300, a 114.3 percent growth from N140 last year. Tobacco’s specific rate was N8.20 per stick, 95.3 percent increase from N4.2 per stick in 2022.

It was also 76.4 percent higher than the rates they were meant to pay this year before the review and 32.5 percent (N408.2) higher in 2024.

Read also: Five important ways smart manufacturing enables the circular economy

The total ad-valorem rate levied on alcoholic beverages and tobacco products rose by 40 percentage points to 110 percent in June from 70 percent in the same period of last year. The total ad-valorem rate for next year still stands at 110 percent.

Before the taxes were updated, the total ad-valorem rate was previously set to be 70 percent effective in June.

“The last administration had revised upward the excise duty as contained in the 2023 fiscal policy measure without any impact assessment and adequate consultation with stakeholders in the manufacturing sector,” Ajayi-Kadir of MAN, said.

He said the unwarranted and clearly disingenuous escalation of excise and introduction of new taxes had the potential impact of truncating the business projections of producers and assaulting the purchasing capability of the average Nigerian.