The Federal Government of Nigeria has announced significant changes to the Value Added Tax (VAT) policy concerning various energy products, aiming to reduce living costs and promote cleaner energy sources.
Finance Minister Wale Edun disclosed that the new VAT exemptions would apply to a range of items, including diesel, Liquefied Natural Gas (LNG), Compressed Natural Gas (CNG), and electric vehicles.
This initiative is part of the government’s broader strategy to enhance energy security while addressing the rising cost of living. According to an official Gazette issued by the Ministry of Finance, titled VALUE ADDED TAX (MODIFICATION) ORDER, 2024, a total of 63 energy items will now be excluded from VAT collection by relevant agencies, including the Nigeria Customs Service (NCS) and the Federal Inland Revenue Service (FIRS).
Read Also : Hamas Commander, Wife, Two Daughters Killed in Israeli Airstrike in Lebanon
The exclusion of VAT on Automotive Gas Oil (AGO), commonly referred to as diesel, is set to take effect from October 1, 2024. Other exemptions will be implemented by the designated agencies with approval from the Minister of Finance.
Pay Attention To: LG Poll: There Must Be No Breakdown Of Law, Order In Rivers – Jonathan Warns Police, Others
Currently, the VAT rate in Nigeria stands at 7.5%, which, according to legislation established in 2020, excludes businesses with an annual turnover of less than N25 million.
The comprehensive list of energy items exempted from VAT includes:
1. CNG/LPG Dual Fuel Vehicles
2. Dedicated LPG Vehicles
3. Parts and semi-knocked down units (for assembly) of CNG and LPG Buses
4. Parts and semi-knocked-down units (for assembly) of Electric Vehicles
5. Electric Vehicles
6. Electric Vehicles Battery
7. Electric Vehicles Charging System
8. Electric Vehicle Solar Charging System
9. LPG/CNG Conversion Kits
10. CNG Cylinders
11. CNG Cascades
12. CNG Dispensers
13. Gas Generators
14. CNG Trucks (Bobtails and Bridgers; fixed axle and semi-trailers)
15. Steel Pipes
16. Steel Valves & Fittings
17. SS Tubes & Fittings
18. Storage Tanks (all sizes)
19. Regulators
20. CNG Pumps and Compressors (all types)
21. Steel
22. Pressure Relief Valves
23. Hydraulic Press/Rolling Machine
24. Heat Treatment Equipment
25. Liquid Level Gauge
26. Pumping Housing and Motors
27. Regulator Body
28. Pressure Gauge
29. Truck Chassis
30. Metering and Measuring Equipment (including weighbridges, filling scales)
31. Dispensing Equipment (dispensing scales, nozzles, gas filling systems)
32. Safety Features (emergency shutoff valves, pressure relief valves, excess flow valves, breakaway couplings, quick release couplings)
33. Gas Water Heaters
34. Gas Burners for Industry
35. Gas Boilers
36. Gas Washing Machines and Dryers (launderettes)
37. Household or laundry-type washing machines, including machines which both wash and dry
38. CNG, LPG, and Cryogenic Tubes, pipes, and hoses, and fittings thereof (e.g., joints, elbows, flanges) of plastics
39. CNG Truck Heads
40. Gas Leak Detectors
41. Gas Air Conditioners
42. Cylinder Refurbishment Equipment
43. Blending Skid/Unit
44. Odourizing Unit
45. Chromatography Unit (GC)
46. LNG Liquefying Equipment, Heat Exchangers, LNG Vapourizers, Regasification Plant, Liquefied CNG, Compression Terminals
47. LNG Plant, Machinery, Pumps, Compressors, Filters (including Gas Filters), Weighing Machines, Valves & Equipment
48. Cryogenic Storage Tanks, Liquefied CNG Conversion Tanks
49. Pipes, Piping Fittings, Flanges used for Liquefied Natural Gas processing
50. Electrical Equipment, including Cables for Liquefied Natural Gas processing
51. Steel Plates, Angles, Bars for Liquefied Natural Gas Processing
52. LNG Related Chemicals
53. Biogas Digester
54. Biogas Compressor
55. De-sulphurization Units
56. Dryer
57. Distillation Columns for Processing Biofuels
58. Bio-ethanol Refinery Equipment
59. Fermentation Tanks
60. Biofuel Related Chemicals, Enzymes, and Reagents
61. Liquefied Petroleum Gas
62. Compressed Natural Gas
63. Feed Gas
64. Automotive Gas Oil
These exemptions reflect the government’s commitment to fostering a more sustainable energy sector and alleviating financial burdens on consumers.
