The Federal Government has confirmed that it had started the implementation of the payment of 7.5 per cent Value Added Tax on Automotive Gas Oil, widely known as diesel.
This was confirmed by officials of the Nigeria Customs Service and Federal Inland Revenue Service, FIRS, in Abuja on Monday, noting that AGO was not exempted from the payment of VAT in line with the Modification Order 2021.
Nigerians have kicked against the development, stressing that citizens were still grappling with the hike in the pump price of Premium Motor Spirit, popularly known as petrol, without knowing that the government already concluded plans to further increase price of diesel.
Responding to a question on if the NCS now collects 7.5 per cent VAT on the imports of AGO, Abdullahi Maiwada, the spokesperson for the service responded, “Yes.”
He continued, “If you ask me whether Customs collect 7.5 per cent VAT on AGO, I will tell you yes and I’ll give you the reasons. There’s what we call VAT Modification Order 2021, which exempts petroleum products of Harmonised System Codes.
“But the HS Codes for Petroleum products that are 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.”
An official of the FIRS, Tobi Wojuola, also confirmed the development, stressing that it was the position of the VAT Modification Order.
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He said, “The position of the VAT Modification Order 2021 is that VAT is chargeable on diesel.”
In a letter from the NCS signed by the Assistant Comptroller-General (Tariff and Trade), Mba Musa, on behalf of the Deputy Comptroller-General (Taritf and Trade) to some of its personnel, on the matter, with reference: NCS/T&T/T/899/217/VOL.I, and dated June 8, 2023, the service made it clear that VAT must be paid on diesel.
It partly read, “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 copy of the letter from FIRS is attached for your information. Take note and be guided accordingly, please.”
Citizens have spoken against the introduction of the 7.5 per cent Value-Added Tax on the price of diesel.
This follows the removal of petrol subsidy barely a month ago by President Bola Tinubu, raising the price of PMS from N188 to about N580 in different states of the federation.
Recall that the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced that the Finance Act 2020 raised the previous five per cent VAT of the country to 7.5 per cent on commodities including automobile gas oil and it was implemented on February 20, 2020.
However, the VAT-exempt items include honey, bread, cereals, cooking oils, culinary herbs, fish, flour, starch, fruits, meat, poultry, milk, nuts, pulses, roots, salt, vegetables, water, sanitary pads, tampons, tertiary, secondary, primary and nursery tuition.
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