By Merit Ibe

The Centre for Promotion of Private Enterprise (CPPE), has remarked that imposition of excise duty on all services as envisioned in the  Finance Bill waiting President Muhammadu Buhari’s accent was  open-ended and inimical to investment.

The Centre  noted that the provision was too broad, inexact and wide, and would  make the business community very vulnerable.

The Finance  Bill awaiting Buhari’s approval imposes excise duties on all services with rates to be determined by a presidential order.  

Imposition of 0.5 per cent tax on all eligible imports from non-African countries to fund Nigeria obligations to international organisations, among others.

Commenting on the development, Director of the centre, Dr Muda Yusuf explained that there is no jurisdiction around the world where all services are liable to excise duty, saying excise duties are typically specific, selective and often imposed to disincentivize consumption or production of particular product groups.

“The current open-ended provision is inimical to investment. It makes the imposition of excise duties arbitrary, indiscriminate and unpredictable.  The bill should contain specifics of services to be taxed for better stakeholder engagement.”

Yusuf, however said it was important to take account of the fact that practically all services are currently liable to Value Added Tax. 

The service sector is a very strategic sector in the Nigerian economy, contributing 54 per cent to GDP and currently the largest contributor to government tax revenue.  It also accounts for an estimated 53 per cent of employment. 

He said the centre was concerned that companies in the services sector were already paying huge taxes in the form of company tax, which is currently at 30 per cent , tertiary education tax at 2.5 per cent, NITDA levy at 1 per cent, NASENI levy at 0.25 per cent, Police Trust Fund Levy at 0.005 per cent and withholding tax on profit distribution at 10 per cent, adding that all the taxes are percentages of company profit.  “Additionally, there are numerous taxes and levies imposed by state governments.

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Investors in the sector pay various sums as fees and levies to regulatory agencies. 

He lamented that the high tax burden on businesses was detrimental to investment and job creation and could ultimately undermine revenue generation prospects of government.

“Revenue drive should rather focus on efficiency, effectiveness and equity as major policy objectives of taxation.” 

Dr Yusuf also decried the proposal in the  Bill to impose 0.5 per cent levy on all imports coming from outside of Africa, which he said  will be an additional burden on both businesses and the citizens.

 According to him, It will escalate operating expenses, production costs and fuel inflation in the economy. 

“Most equipment, machineries, ICT equipment, medical equipment are all imported from outside of Africa. Imposing a levy of 0.5 per cent on this group of items will be inimical to investment, economic growth and the welfare of the citizens. 

He said already, currency depreciation had made imports very expensive with profound inflationary effects. 

“Currently, investors and citizens are paying 0.5 per cent levy on all imports from outside of ECOWAS. This is in addition to import duty and numerous charges and levies paid by importers at the ports.

“Many manufacturers import their raw materials from outside of Africa, especially intermediate products not available on the continent.”

He advised against the imposition of an additional levy on imports.