The FG introduces a 7.5% VAT on diesel.
The payment of the 7.5% Value Added Tax on Automotive Gas Oil, also known as diesel, was officially announced by the Federal Government on Monday.
In Abuja, representatives of the Federal Inland Revenue Service and the Nigerian Customs Service reaffirmed that AGO was not exempt from paying VAT in accordance with the VAT Modification Order 2021.
Nigerians, however, criticized the news, pointing out that people were still attempting to acclimatize to the increase in the pump price of Premium Motor Spirit, more commonly known as gasoline, without being aware that preparations had been made to further increase prices for diesel.
Our correspondent inquired as to whether the NCS was currently collecting 7.5% VAT on AGO imports, and Abdullahi Maiwada, the service’s spokesperson, responded, “Yes.”
He continued, “If you ask me whether Customs collect 7.5 per cent VAT on AGO, I will tell you yes and I’ll give you the reasons. There’s what we call VAT Modification Order 2021, which exempts petroleum products of Harmonised System Codes.
“But the HS Codes for Petroleum products that are exempted from paying VAT are those in the region of 2709.00.00.00 – 2710.19.12.00. The HS Codes are what we use to classify commodities. But AGO is classified under HS Code 2710.19.21.00, which is not exempted from the payment of VAT. Now, this is based on the VAT Modification Order 2021.”
Tobi Wojuola, a representative of the FIRS, reaffirmed the development and emphasized that it was in line with the VAT Modification Order’s position.
“The position of the VAT Modification Order 2021 is that VAT is chargeable on diesel,” he said.
The NCS made it plain that VAT must be paid on diesel in a letter to certain of its employees on the subject with the reference: NCS/T&T/T/899/217/VOL.I, spotted in Abuja and dated June 8, 2023.
On behalf of the Deputy Comptroller-General (Tariff and Trade), the letter was signed by Mba Musa, Assistant Comptroller-General (Tariff and Trade).
It read in part, “I am directed to forward a letter from Federal Inland Revenue Service on the above subject matter. The VAT Modification order 2021 only exempts petroleum products of HS codes 2709.00.00.00 – 2710.19.12.00 from payment of VAT. AGO or diesel falls classifiable under HS Code 2710.19.21.00 and is not exempted from paying VAT.
“Subsequent upon the above, all future importations of the product should assess and pay VAT at the point of entry into the country. Also note that AGO or diesel are not exempted from destination inspection or import guidelines and as such are expected to process Form M and PAAR as well as make declarations appropriately in the NICIS II system.
“A copy of the letter from FIRS is attached for your information. Take note and be guided accordingly, please.”
