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.