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Excise Duty: Manufacturers to Raise Alcoholic Beverage Prices by 15%

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British American Tobacco
  • Excise Duty: Manufacturers to Raise Alcoholic Beverage Prices by 15%

Following the implementation of a new excise duty regime on alcoholic beverages and tobacco products from Monday, June 1, 2018 by the Minister of Finance, Mrs. Kemi Adeosun, sales of the affected products have already slowed down as the manufacturers work on a new pricing structure.

Our correspondent gathered that the increase in prices would take effect immediately just as the new tariff structure.

The Chief Executive Officer of a wine manufacturing firm in Lagos, PEL Extract Limited, Mr. Kotey Linus, estimates that there will be over 15 per cent increase in the price of wines.

According to him, whereas a crate of wine from his firm is currently N3,000, with the new tariff, it will now sell for N3,500.

The Group Chief Operating Officer, Sona Group of Companies, Mr. Ashok Manghnani, said that the firm was already looking at the new tariff structure to work out new prices for its wines.

He stated that since the margin of sales was very small, the firm had no choice than to pass the cost to the final consumers, adding that there were efforts to ensure that the burden was not too much on the consumers.

This is taking place even as the Distillers and Blenders Association of Nigeria has reportedly taken the matter to court.

On getting wind of the planned increase duty, the association had in February addressed an open letter to President Muhammadu Buhari, saying that it would threaten over N420bn worth of investments.

In the letter, which was published by The PUNCH, the association maintained that far from being luxury items, the products by its members were largely consumed by the low-end and mainstream segment of the society, adding that any huge adjustment in the prices of the products occasioned by high excise duty could lead to low demand and staff lay-offs.

The industry, according to the operators, contributes N60bn annually to the economy in corporate tax and Value Added Tax, while employing 10,000 people directly and 15,000 indirectly.

The operators feared that the increase could kill the wine and spirits sub-sector.

“Most locally produced brands are packed at about N250 per bottle and a massive increase in the excise duty, ranging from average of N142 to N175 per litre, is a decision to kill the industry. This will also put local manufacturers at a disadvantage against imported brands,” the association noted.

It added that its members were operating with marginal gains and any increase in tariff would bring them to a negative balance, forcing them to close shop and retrench workers.

The implication of transferring costs to consumers whose purchasing power has been wiped out by inflation and unemployment, according to the operators, is that sellers of the goods may not find buyers.

The Head, Economics and Statistics, Manufacturers Association of Nigeria, Mr. Ambrose Oruche, said that manufacturers’ warehouses in the country were full of stocks of unsold goods owing to lack of market.

The Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, told our correspondent that it was not the best time to even consider imposing excise duty on the goods.

He said, “If the government is trying to grow the local industry, imposing duties on locally manufactured goods is a contradiction of that objective. That is what we are saying about this drive to earn revenue. If the revenue drive is becoming too aggressive, it will negatively affect investment and the capacity of businesses to create jobs.

“The imposition of duties on these consumer goods will push up the cost of production and the prices of the items will be increased.

“These firms are already paying Corporate Tax, Withholding Tax, Education Tax and so many other taxes. Imposing excise duty on their products again will not be a good idea.”

Against the backdrop of the minister’s claims that the excise duty was decided after due consultations with stakeholders, MAN, a member of the Presidential Tariff Technical Committee, said it rejected the tariff increase at the last meeting it held with Adeosun.

The Director-General, MAN, Mr. Segun Ajayi-Kadiri, stated that the association had rejected any imposition of tariffs on locally manufactured goods, because the industry was still struggling for survival.

Ajayi-Kadiri pointed out that manufacturers of wines were mostly operators in the Small and Medium Enterprises sector of the economy, adding that the new regime would make them less competitive against other players.

The President, MAN, Dr. Frank Jacobs, confirmed this, arguing that the duty increase would cause the firms producing the affected items to shut down, while increasing job losses.

He explained, “During the last presidential engagement forum, I talked about the impact of this excise duty increase on the manufacturing sector. I made it clear that if they go ahead and implement that policy, within the three years when that policy will be in full force, many of the companies that are involved in those products must close shops.

“They definitely must close shops, because there is no way they can become competitive.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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The Highest Corporation Taxes Around the World and the Main Drivers Behind them

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Taxes Pay by Corporation Around the World and the Main Drivers Behind them

While corporation tax rates are influenced by the country’s definition, there’s clearly a pattern with developing countries and emerging economies paying higher rates to sustain the country.

The top five richest countries in the world’s corporation tax are relatively varied, with Luxemburg standing at 27.08%, Norway at 22%, Iceland at 20%, Switzerland at 18% and Ireland at 12.5%. It would appear that some countries’ cultures factor into how much tax they pay. For example, Scandinavian countries are proud to pay higher taxes to contribute to social welfare.

On average, Africa has the highest corporation tax rate throughout the world’s continents at 28.45% and South America, the second highest with an average rate of 27.63%. However, Europe stands at the lowest rate of 20.27%. Does this contradict the claim that developed countries pay higher tax?

OECD explained that corporation tax plays a key part in government revenue. This is particularly true in developing countries, despite the global trend of falling rates since the 1980s. Let’s take a closer look at two continents, South America and Africa, paying the highest corporation tax rates in the world.

South America has most countries in highest corporation tax top 10

According to data analysed, Brazil and Venezuela have the highest corporation tax at 34%, followed closely by Colombia at 33%, and Argentina at 30%, making South America the continent with the most countries in the top 10 who pay the highest corporation tax.

It is unclear whether South America, as an emerging continent, is charging higher taxes in order to raise government revenue or to benefit from businesses that are looking to expand internationally and enter new markets. According to research, South America is becoming a popular choice for business to enter, with strong trade links and an advantageous geographic location. Indeed, South America is a large continent where some countries are business friendly and others are harder to penetrate.

Africa: the continent with the highest average corporation tax

Being the poorest continent in the world, Africa unsurprisingly has the highest average corporation tax at 28.45%. With the highest in this data being Zambia at 35% and the lowest being Libya and Madagascar at 20%, South Africa stands roughly in the middle at 28%, slightly above average for Africa overall. Does this mean that South Africa is the safest bet for business?

South Africa is one of Africa’s largest economies, with 54 diverse countries in terms of political stability, development, growth, and population. As South Africa has been a relatively slow growth area over the years, corporation tax dropped from 34.55% in 2012 to the current rate — but was this effective? GDP in South Africa has fluctuated quite dramatically since the 1960s. Business favours countries with political stability, which is something South Africa doesn’t currently have. Furthermore, South Africa’s government debt to GDP sits roughly in the middle of the continent’s countries — is this influencing their corporate tax rate?

Country Continent Tax (%)
Puerto Rico North America 37.5
Zambia Africa 35
Brazil South America 34
Venezuela South America 34
France Europe 33.3
Columbia South America 33
Morocco Africa 31
Japan Asia Pacific 30.62
Mexico North America 30
Argentina South America 30
Germany Europe 30
Australia Asia Pacific 30
Philippines Asia Pacific 30
Kenya Africa 30
Nigeria Africa 30
Congo Africa 30
Belgium Europe 29
Pakistan Asia Pacific 29
Sri Lanka Asia Pacific 28
New Zealand Asia Pacific 28
South Africa Africa 28
Luxembourg Europe 27.08
Chile South America 27
Canada North America 26.5
Algeria Africa 26
India Asia Pacific 25.17
Jamaica North America 25
Chile South America 25
Ecuador South America 25
Netherlands Europe 25
Spain Europe 25
Austria Europe 25
South Korea Asia Pacific 25
Bangladesh Asia Pacific 25
China Asia Pacific 25
Indonesia Asia Pacific 25
Zimbabwe Africa 25
Tunisia Africa 25
Greece Europe 24
Italy Europe 24
Malaysia Asia Pacific 24
Israel Middle East 23
Egypt Africa 22.5
Norway Europe 22
Denmark Europe 22
Turkey Europe 22
Sweden Europe 21.4
United States North America 21
Portugal Europe 21
Russia Europe 20
Finland Europe 20
Iceland Europe 20
Afghanistan Asia Pacific 20
Azerbaijan Asia Pacific 20
Kazakhstan Asia Pacific 20
Thailand Asia Pacific 20
Vietnam Asia Pacific 20
Cambodia Asia Pacific 20
Taiwan Asia Pacific 20
Saudi Arabia Middle East 20
Jordan Middle East 20
Yemen Middle East 20
Madagascar Africa 20
Libya Africa 20
Slovenia Europe 19
Czech Republic Europe 19
Poland Europe 19
United Kingdom Europe 19
Belarus Europe 18
Croatia Europe 18
Switzerland Europe 18
Ukraine Europe 18
Singapore Asia Pacific 17
Hong Kong Asia Pacific 16.5
Lithuania Europe 15
Georgia Asia Pacific 15
Maldives Asia Pacific 15
Kuwait Middle East 15
Iraq Middle East 15
Ireland Europe 12.5
Cyprus Europe 12.5
Bulgaria Europe 10
Qatar Middle East 10
Hungary Europe 9
Barbados North America 5.5

 

Lucy Desai is a content writer at QuickBooks, a global company offering the world’s leading accountancy software.

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African Development Bank Appoints Ms. Yacine Fal as Director General, Cabinet Office of the President

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Adesina Appoints Ms. Yacine Fal as Director General, Cabinet Office of the President

African Development Bank has appointed Ms. Yacine Fal as the Director General, Cabinet Office of the President, effective from November 1st 2020.

According to a statement put out by the multilateral financial institution, Ms. FaI will oversee the administrative and operational work and activities of the Cabinet Office of the President as the new Director General.

Mainly, “she will provide oversight of all units and departments directly reporting to the President. She will also ensure enhanced delivery efficiency and effectiveness for all Presidential initiatives and Bank operations, as per agreements with respective Vice Presidency Complexes. She will oversee the work of senior staff to improve overall coordination and engagement of the President and Chairman of the Board of Directors with the Board.”

Yacine Fal is a Senegalese citizen with Masters of Law degree from the University of Dakar and obtained her postgraduate degree in international law from the University of Paris X.

Commenting on her appointment, Yacine said “I am greatly honored by the confidence reposed in me by President Adesina to support him in ensuring the successful implementation of his bold vision for the Bank and the continent. I look forward to leading teams in the President’s Cabinet Office to provide managerial, administrative and operational bandwidth and to assure the success of the President’s vision and mandate following his historic re-election with 100% vote of the Bank’s shareholders.”

Speaking on her appointment, Dr. Adesina, the President, AfDB, said “Yacine is a highly capable manager. She brings vast knowledge and experience of the Bank’s legal, procurement, human resources, processes, systems, and operations to her new position. I am delighted to have Yacine lead a restructured Cabinet Office of the President that will comprehensively support the delivery of my vision and mandate to strengthen the Bank and accel erate Africa’s devel opment.

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Global Life & Health Insurance Top Industry by Revenue in 2020 at $4.4 Trillion

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Global Life & Health Insurance Industry Leads in Terms of Revenue Generation in 2020 at $4.4 Trillion

According to the research data analyzed and published by ComprarAcciones, life and health insurance will be the biggest industry globally in 2020. The sector has been growing at an average rate of 2.4% from 2015 to 2020 and will surpass $4.384 trillion.

According to Global Data, the insurance sector as a whole raked in $2.611 trillion in 2019 and was the sixth largest. Notably though, an Allianz Global insurance report projects a decline of 3.8% for the industry worldwide in 2020.

Top 12 Publicly Listed Oil Companies Post $80 Billion Loss in H1 2020

2019 was a great year for insurance as premiums grew at a rate of 4.4%. However, the 2020 decline will be over three times worse than after the 2008 financial crisis. At the time, the sector only shrank 1%. An Allianz study projects that in 2021, the growth rate of insurance premiums will return to pre-pandemic levels.

Oil and gas, which was the top industry in 2019, is ranked third in 2020. It is expected to rake in $3.325 trillion in revenue in 2020. In 2019, it made over $4.797 trillion, growing 16.2% in revenue and 36.3% in profits year-on-year (YoY).

The situation in 2020 is vastly different as the top 12 publicly traded oil companies reported a collective loss of $80 billion. According to Anadolu Agency, during H1 2019, they had posted a collective net income of $46.5 million.

On the other hand, banking was the third largest industry by revenue in 2019, raking in $4.424 trillion. However, in 2020, it sits in the eight spot and is estimated to generate $2.341 trillion. Putting this in perspective, the top 5 Chinese banks reported a drop of $9.9 billion in H1 2020 profit. In the US, the top 6 banks increased loan loss provisions from $25 billion in Q1 2020 to $35 billion in Q2 2020.

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