Monday, February 3, 2025 - A federal high court in Abuja has declared the excise duty on carbonated drinks introduced by the federal government invalid. The judgment follows a lawsuit filed in 2022 by the Nigeria Employers’ Consultative Association (NECA), challenging the implementation of a N10 per litre excise duty on nonalcoholic, carbonated, and sweetened beverages.
The excise tax, popularly referred to as the "sugar tax," was
introduced to discourage the excessive consumption of sugary drinks linked to
diabetes, obesity, and other health issues. However, NECA, representing the
interests of businesses, argued that the tax was unjustifiable and filed a suit
naming the Minister of Finance, Wale Edun, and the Minister of Budget and
National Planning, Atiku Bagudu, as defendants.
On Monday, February 3, NECA announced that Justice O.A. Egwuatu of the
federal high court had ruled against the excise duty. The court rejected the
preliminary objection raised by the Ministry of Finance, describing it as
lacking merit. After three years of legal proceedings, the court ruled that the
circular issued by the Ministry of Finance, titled “Approval for the
Implementation of 2022 Fiscal Policy Measures and Tariff Amendments,” was
invalid and beyond the ministry's legal powers.
The judgment also clarified that the Nigeria Customs Service is not
entitled to demand transport and feeding allowances from NECA members. NECA’s
director-general, Adewale Smatt-Oyerinde, hailed the ruling as a victory for
organized businesses, emphasizing that it was a rejection of "official
arbitrariness and unfortunate attempts to impose additional burdens on
businesses."
In July 2024, Wale Edun had announced that the federal government was
considering a temporary suspension of the sugar tax as part of a six-month
economic stabilization plan. This ruling further undermines the implementation
of the controversial excise duty, delivering a significant win to businesses in
Nigeria.
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