The Federal Government has announced new Value Added Tax (VAT) exemptions for various energy products, including diesel, Liquefied Natural Gas (LNG), Compressed Natural Gas (CNG), and electric vehicles. This initiative aims to help lower prices and ease the cost of living for Nigerians.
Finance Minister Wale Edun explained that the government’s actions are intended to enhance energy security and promote a transition to cleaner energy sources in Nigeria.
According to an official Gazette titled Value Added Tax (Modification) Order, 2024, 63 items will now be exempt from VAT collection by the Nigeria Customs Service (NCS), the Federal Inland Revenue Service (FIRS), and other relevant agencies.
As per the Gazette, the exemption for Automotive Gas Oil (AGO), commonly known as diesel, will take effect on October 1, 2024. Other items will be implemented by the relevant agencies upon approval from the Minister of Finance.
The VAT rate in Nigeria is currently set at 7.5%, as established in 2020, and it does not apply to businesses with an annual turnover of less than N25 million.
The following 63 items are now exempt from VAT:
- CNG/LPG Dual Fuel Vehicles
- Dedicated LPG Vehicles and CNG/LPG Dual Fuel Vehicles
- Parts and semi-knocked-down units for assembly of CNG and LPG buses
- Parts and semi-knocked-down units for assembly of electric vehicles
- Electric vehicles
- Electric vehicle batteries
- Electric vehicle charging systems
- Electric vehicle solar charging systems
- LPG/CNG conversion kits
- CNG cylinders
- CNG cascades
- CNG dispensers
- Gas generators
- CNG trucks (Bobtails and Bridgers; fixed axle and semi-trailers)
- Steel pipes
- Steel valves and fittings
- Stainless steel tubes and fittings
- Storage tanks (all sizes)
- Regulators
- CNG pumps and compressors (all types)
- Steel
- Pressure relief valves
- Hydraulic press/rolling machines
- Heat treatment equipment
- Liquid level gauges
- Pumping housings and motors
- Regulator bodies
- Pressure gauges
- Truck chassis
- Metering and measuring equipment (including weighbridges and filling scales)
- Dispensing equipment (dispensing scales, nozzles, gas filling systems)
- Safety features (emergency shutoff valves, pressure relief valves, excess flow valves, breakaway couplings, quick release couplings)
- Gas water heaters
- Gas burners for industrial use
- Gas boilers
- Gas washing machines and dryers (launderettes)
- Household or laundry-type washing machines, including machines that wash and dry
- CNG, LPG, and cryogenic tubes, pipes, and hoses, and fittings (e.g., joints, elbows, flanges) of plastics
- CNG truck heads
- Gas leak detectors
- Gas air conditioners
- Cylinder refurbishment equipment
- Blending skids/units
- Odorizing units
- Chromatography units (GC)
- LNG liquefying equipment, heat exchangers, LNG vaporizers, regasification plants, liquefied CNG, compression terminals
- LNG plants, machinery, pumps, compressors, filters (including gas filters), weighing machines, valves, and equipment
- Cryogenic storage tanks and liquefied CNG conversion tanks
- Pipes, piping fittings, and flanges used for liquefied natural gas processing
- Electrical equipment, including cables for liquefied natural gas processing
- Steel plates, angles, and bars for liquefied natural gas processing
- LNG-related chemicals
- Biogas digesters
- Biogas compressors
- De-sulfurization units
- Dryers
- Distillation columns for processing biofuels
- Bio-ethanol refinery equipment
- Fermentation tanks
- Biofuel-related chemicals, enzymes, and reagents
- Liquefied petroleum gas
- Compressed natural gas
- Feed gas
- Automotive gas oil
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