Bola Tinubu Signs 4 Executive Orders, Suspends 5% Excise Tax on Telecoms, Others

President Bola Tinubu called for the immediate suspension of the 5% telecoms excise tax with that of the Import Tax Adjustment charge on certain cars on Thursday. 

This happened as the President signed four (4) executive directives into law to curtail the country's unfair taxing policy. Dele Alake, Special Adviser to the President on Special Duties, Communication, and Strategy, issued the policy order on Thursday during an interactive session with State House Correspondents. 

The President's Executive Orders contain a revision in the date of implementation of the Finance Act, 2023. The President postponed the implementation of the Act's modifications from May 23, 2023, to September 1, 2023.

This is to guarantee compliance with the 90-day advance notification requirement for tax changes outlined in the 2017 National Tax Policy. 

Briefing the correspondents on why President Tinubu is reviewing some of the tax policies signed by Muhammadu Buhari, Alake said: 

• “You will all recall that prior to the advent of this Administration, certain tax changes were introduced via the Customs, Excise Tariff (Variation) Amendment Order, 2023 (henceforth referred to as “the Order”) published on the 8th of May 2023 and the Finance Act, 2023, which was signed into law on the 28th of May 2023. 

• “Among others, the Order introduced new Excise Duty on Single Use Plastics (SUPs), higher Excise Duties on some locally manufactured products, including alcoholic beverages and tobacco products, and Green Tax by way of Import Tax Adjustment on certain categories of imported vehicles. 

• “The Tinubu Administration has since noticed that some of the tax policies are being implemented retroactively with their commencement dates, in some instances, pre-dating the official publication of the relevant legal instruments backing the policies. This lacuna has created some challenges of implementation.” 

•     He noted that the intentions behind upward adjustments of some of the taxes are quite noble as they were designed to raise revenue as well as address environmental and public health concerns. However, they have generated some significant challenges for affected businesses and elicited serious complaints amongst key stakeholders and in the business community. 

• “Let me mention some of the problems we have identified with the aforementioned tax changes.  A document known as the 2017 National Tax Policy approved by the Federal Executive Council of the last administration prescribes a minimum of 90 days' notice from the government to tax-payers entities before any tax changes can take effect.  

• “This global practice is done with a view to giving taxpayers and businesses reasonable time to adjust to the new tax regime. However, evidencing part of the gaps pointed out earlier, both the Finance Act 2023 and the Customs, Excise Tariff Order 2023 did not give the required minimum notice period, thus putting businesses in violation of the new tax regime even before the changes were gazetted,” he added.

Alake said that the impact of the poor economy, and the Naira restructuring strategy, many of the impacted firms are already dealing with increasing prices, declining margins, and capacity underutilization.

According to him, the previously agreed Excise Tax hikes on tobacco goods and alcoholic drinks from 2022 to 2024 are also being implemented. 

However, the current Administration's continuing increase of permitted rates provides an image of policy inconsistency and fosters an environment of uncertainty for firms operating in Nigeria. 

• “The Excise Tax of 5% on telecommunication services has generated heated controversy. There is also a lack of clarity regarding the status of this tax, just as players in the sector also complain about the imposition of multiple taxes on their operations. 

• “We have also seen that the Green Taxes, including the Single Use Plastics tax and the Import Adjustment Levy on certain categories of vehicles, require more consultation and a holistic approach to the country’s net zero plan in a manner that does not impact the economy negatively,” he said.  

According to the Presidential Spokesman, these instructions are intended to reduce the negative impacts of tax modifications on companies and people throughout impacted sectors.

He did, however, confirm the President's commitment to solving issues related to different taxes, municipal, and anti-business restrictions.

Alake said that the Tinubu government would continue to provide the necessary motivation through favourable regulations to enable companies to prosper all over the country.

The President told Nigerians that there would be no future tax increases until active and broad discussions are held within the context of a unified economic policy framework.

President Tinubu's efforts also include the suspension of the 5% Excise Tax on communications services as well as the excise levy on domestically made goods. Executive Order 4 suspends the recently implemented Green Tax on Single-Use Plastics and the Import Tax Adjustment tax on specified cars.