On June 19, 2023, the federal government of Nigeria affirmed commencement of the implementation of 7.5 percent Value Added Tax (VAT) payment on Automotive Gas Oil (AGO), generally called diesel. The commencement was announced by officials of the Nigeria Customs Service and Federal Inland Revenue Service in Abuja. Nigerians strongly disagree with this development as they lamented how unbearably they are trying to cope with inflated Premium Motor Spirit’s, popularly known as petrol, pump prices.
Spokesperson for the Nigeria Customs Service, Abdullahi Maiwada, asserted that the service now collect the 7.5 percent. He added that although there is an exemption of petroleum products of Harmonised System (HS) Codes under VAT Modification Order 2021, petroleum products of HS Codes that are excluded from paying are those under 2709.00.00.00 – 2710.19.12.00. The function of the HS Codes are for classification of commodities. AGO has its HS Codes classified under 2710.19.21.00, with no exemption from the VAT payment.
Nigerians lament the consequences of the payment on AGO.
An official of the Federal Inland Revenue Service, Tobi Wojuola, likewise confirmed the development. He emphasized that it was the VAT Modification Order’s position which dwells on the concept that is chargeable on diesel. The NCS, in a letter with reference “NCS/T&T/T/899/217/VOL.I,” on June 8, 2023, stated that it is mandatory that it is paid on diesel. The letter had the signature of the Assistant Comptroller-General (Tariff and Trade), Mba Musa, representing the Deputy Comptroller-General (Tariff and Trade).
Subsequently, all importations of AGO, diesel, are required to ensure assessment and payment of VAT before entry into the country. It was also stated that there is no exemption of AGO and PMS from destination inspection and import guidelines. Therefore, they are required to process Form M and PAAR and make appropriate declarations in the system of the NICIIS II. Nevertheless, Nigerian citizens lament concerning the effects of this development on the price of diesel.
Finance Act 2020 increased VAT from 5 percent to 7.5 percent.
These payments were imposed on AGO and were announced barely one month after removal of petrol subsidy by President Bola Ahmed Tinubu, whilst delivering his inaugural speech, which has increased the pump price of PMS in many parts of the country from N188 to over N500. Also, the Minister of Finance, Budget and National Planning, Zainab Ahmed, has previously announced the raise of the country’s tax from five percent to 7.5 percent, under the Finance Act 2020, on commodities including AGO. This Act was implemented on February 20, 2023.
Commodities that are exempted from the VAT payment include bread, cooking oils, fish, starch, meat, milk, pulses, salt, water, tampons, honey, cereals, culinary herbs, flour, fruits, poultry, nuts, roots, vegetables, sanitary pads, even tuition for tertiary, secondary, and primary and nursery education. While other commodities have been compliant to these taxes, diesel only just began to charge these fees. However, Nigerians have requested that there is a review of this development due to the recent removal of subsidy.
As promised, Mr. President has begun widening the tax net.
Twitter User, Inagwa, estimated the total price of diesel per litre, after paying VAT to be N698.95. Another lamenting non-Nigerian stated that Tinubu was not joking when he promised to widen the tax net. Also, in Oyo, it was stated that there is no plan to reduce the cost of the government to the Senate, House of Representatives and other departments. Education was seen as the first targeted area for the increment in tuition fees. At the moment, the VAT payment on AGO and PMS are the issues affecting Nigerians now.
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Mandatory VAT payment on AGO, diesel – HS Codes classify commodities, exempting some from VAT payment. – Express your point of view.
There is now VAT on petroleum products. I actually don’t know where we are going to in this country. If tax is being paid on every diesel , it just tells us the extent at which the government want to ridiculously generate revenue.
Mandatory VAT payment on AGO, diesel, this is a rise in tax everywhere that will be generating revenue for the country it will also affect the people also we are already battling removal of fuel subsidy now increase in tax also
Our is been a widening now impose tax on commodities it act will generate for the country and high price on diesel because of mandatory vat payment
AGO and diesel are subject to mandatory VAT payment in Nigeria as they fall under the platform which covers petroleum oils and oils obtained from bituminous minerals, crude. However, there are exemptions for some commodities based on their classification under these platforms. It is important for businesses and individuals to be aware of the applicable platform and the VAT rates and exemptions that apply to different types of commodities to ensure compliance with Nigerian tax laws.
This mandatory value added tax imposed on individuals who are going through a lot will affect us. We will bare the cost but government must withhold there responsibility to utilize the funds faithfully and appropriately.
The mandatory VAT payment on AGO is a welcoming one. The system will stop the the illegal importation of crude oil from Nigeria and ig will also generate alot of revenue for the country.
Honestly the decision to add VAT on AGO, diesel will only create more nightmares for Nigerians who are still struggling will already increased price. I hope all these decisions will yield positivity in the long run.
The mandatory payment of VAT on AGO, diesel will only make increase the cost of commodities in Nigeria thereby making life miserable for the less priviledge. Federal Government should provide relief to cuisine the effect on the masses.
Mandatory VAT payment on AGO, diesel. This is Too much for the country. Everything is on the high side, we have people in government that don’t even care or see the tears and the suffering in Nigerians. The government salaries and allowances is over much. They are even Planning to increase their salaries. And ordinary people suffering with heavy load of pains while the leaders take all the money to enjoy with their families and people around them. Our leaders are over Rich yet they don’t want to sacrifice anything but they truly want the poor masses to sacrifice everything. WHY?
We will be impacted by the required value added tax that is being put on people who are already struggling. We will pay the price, but the government must abdicate its duty to faithfully and properly use the money.