Court strikes down excise duty on carbonated drinks

A Federal High Court in Abuja has ruled against the implementation of the excise duty on carbonated drinks introduced by the federal government, declaring the policy invalid.
The ruling follows a lawsuit filed in 2022 by the Nigeria Employers’ Consultative Association (NECA) challenging the N10-per-litre excise duty on nonalcoholic, carbonated, and sweetened beverages.
The levy, commonly referred to as the “sugar tax,” was introduced to curb excessive sugar consumption linked to health issues such as diabetes and obesity.
NECA, representing businesses across various sectors, argued that the tax was unjustified and placed an undue burden on companies. The lawsuit listed the Minister of Finance, Wale Edun, and the Minister of Budget and National Planning, Atiku Bagudu, as defendants.
Delivering the judgment, Justice O.A. Egwuatu ruled that the policy was “invalid and ultra vires,” stating that the Federal Ministry of Finance lacked the authority to impose such a tax.
The court also ruled that the Nigeria Customs Service could not demand transport and feeding allowances from NECA members.
Reacting to the verdict, NECA Director-General Adewale Smatt-Oyerinde described the ruling as a victory for businesses, saying it marked an end to what he termed “official arbitrariness” and the imposition of excessive financial burdens on companies.
Meanwhile, in July 2024, Finance Minister Edun had hinted at a possible temporary suspension of the sugar tax as part of a six-month economic stabilisation plan.