Nigerians Groan as FG Implements 7.5% VAT on Diesel Price
- The Federal Government has begun the collection of Value Added Tax (VAT) on diesel
- Nigerian Customs Service and the Federal Inland Revenue Service officials revealed the development
- The officials of the agencies said it was the position of the VAT Modification Order that 7.5% VAT be collected on diesel
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The Nigerian government confirmed on Monday, June 19, 2023, that it had started the implementation of payment of 7.5% Value Added Tax on Automated Gas Oil, known as diesel.
Nigeria Customs and the Federal Inland Revenue Service officials disclosed this in Abuja, stating that diesel was not exempted from the payment of VAT based on VAT modification Order 2021.
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Nigerians kick against policy as Customs, FIRS confirm development
Nigerians have lashed out at the new policy and stated that they are yet to adjust to the recent hike in petrol prices without realizing that the Federal Government had perfected plans to raise the cost of diesel.
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Customs officials confirmed the development, pointing out that the VAT Modification Order 2021 exempts petroleum products from Harmonised System Codes.
A Customs official said:
“But the HS Codes for Petroleum products 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.”
Punch reports that an official of the Federal Inland Revenue Service (FIRS), Tobi Wojuola confirmed the development and said that it was the position of the VAT Modification Order.
According to reports, a letter from the Nigerian Customs Service to its personnel dated June 8, 2023, stated that VAT must be paid on diesel.
The Assistant Comptroller-General (Tariff and Trade) Mba Musa, signed the letter on behalf of the Deputy Comptroller-General (Tariff and Trade).
The letter reads:
“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 VAT payment. 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 product importations 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 are expected to process Form M and PAAR and 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.”
FG adds diesel tax on budget
The former Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed that the Finance Act 2020 increased Nigeria's previous 5% VAT to 7.5% on commodities, including automobile gas, which was effected on February 20, 2020.
Items exempted from VAT include honey, bread, cereals, cooking oil, culinary herbs, fish, flour, starch, fruits, meat, poultry, milk, nuts, pulses, roots, salt, vegetables, water, sanitary pads, tampons, tertiary, secondary, primary and nursery tuition.
Diesel has just recently been VAT compliant.
Nigerians have expressed anger over the development, stating that it will lead to another hike in the price of goods and services as manufacturers using diesel-powered generating sets will seek to recoup their profits.
List of new taxes in the 2023 Finance Act and how they might affect Nigerians
Legit.ng reported that the 2022 Finance Act, which became effective January 2023, contains a lot of new taxes
The Finance bill became law when President Muhammadu Buhari assented to it, making it lawful for Nigerians.
It proposes critical reforms to tax laws and other relevant regulations in the country.
Source: Legit.ng
