The Nigeria Customs Service (NCS) has announced the implementation of value-added tax (VAT) on automobile gas oil (diesel) imported into the country, a move that has raised concerns over potential price surges and their impact on Nigerians and manufacturers.
In a memo dated July 28, 2023, the NCS communicated the decision to all importers and agents of diesel. The memo, titled ‘Request for Charge of Value Added Tax (VAT) on Automobile Gas Oil (AGO) or Diesel Imported into the Country’, referenced a headquarters circular from July 27, 2023, on the same subject matter.
The communication, signed by PC Chibuoke (DC admin) on behalf of the area controller, Area I, Port Harcourt, stated that VAT would be charged on diesel, and Procedure Code 4900 000 should be used for all importations of AGO. The memo also specified that importers of diesel are not allowed to use “additional Code 409 in their declaration.”
The implementation of VAT on diesel imports comes as part of the federal government’s efforts to enforce the Finance Act, which was introduced in 2020. According to the Finance Act, a 7.5 percent VAT is to be charged on diesel costs.
The decision has raised concerns about the potential impact on the price of diesel, which has been experiencing surges. The cost of a litre of diesel reached N794.48 in July 2023, compared to N774.38 per litre in the same period the previous year, according to data from the National Bureau of Statistics (NBS).
Many stakeholders, including Nigerians and manufacturers, are worried that the implementation of VAT on diesel imports could lead to further price increases, contributing to the already challenging economic conditions in the country. This move highlights the delicate balance between government revenue generation and the potential impact on citizens’ cost of living and industrial production.
