Diesel prices set to soar as Nigeria Customs imposes VAT
The Nigeria Customs Service (NCS) has announced the commencement of Value-Added Tax (VAT) implementation on Automobile Gas Oil (AGO), commonly known as diesel, for imports into the country.
In a memo dated July 28, 2023, sent to all diesel importers and agents, the service addressed the matter.
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 (No. NCS/T&T/T/899/217/VOL.I) dated July 27, 2023.
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“I am directed to inform you that henceforth, Value Added Tax (VAT) is to be charged on Automobile Gas Oil (AGO), and Procedure Code 4900 000 shall be used for all AGO importations,” the memo stated.
Additionally, the service clarified that importers of diesel are not allowed to use “additional Code 409 in their declaration.”
This development stems from the 2020 implementation of the Finance Act by the federal government, which mandated a 7.5 percent VAT on diesel costs.
This move potentially signals a surge in diesel prices, which have already been on the rise. In July 2023, the price per liter of diesel increased to N794.48, compared to N774.38 per liter during the same period last year, according to data from the National Bureau of Statistics (NBS).
This price hike may further exacerbate the challenges faced by Nigerians and manufacturers alike.