Prices of diesel to rise as customs begins charging 7.5% VAT on diesel imports

Tougher times await Nigerians as the cost of energy may further rise, going by the latest directive of the Federal Inland Revenue Service (FIRS) to the Nigeria Customs Service (NCS).

The tax agency has asked the NCS to begin to charge a 7.5 per cent Value-added Tax (VAT) on Automobile Gas Oil (AGO), otherwise known as diesel, imported into the country.

As a result, the customs, through Assistant Comptroller-General of Tariff and Trade, MBA Musa IN, on behalf of the Deputy Comptroller-General of Tariff and Trade, has informed oil marketers in the country of its intention to begin to demand the new payment from them for diesel imports.

“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 circular from the government to the diesel importers said.

This latest development comes after the federal government stopped the payment of subsidy on premium motor spirit (PMS), also known as petrol, last month, pushing the pump price to N500 per litre from N185 per litre.
As this was causing p@in to Nigerians, the price of diesel eased from over N700
per litre to about N630 per litre.

However, this payment of VAT on diesel by suppliers may push the pump price higher again, with the price of electricity expected to rise next month due to the planned tariff hike.