The Nigerian Employers’ Consultative Association (NECA) warned about the dangers of imposing tax burdens, especially in the areas of energy, citing that the 7.5% Valued Added Tax for Diesel imports needs to be reconsidered.
This was disclosed by NECA’s Director-General, Mr Adewale-Smatt Oyerinde, on Thursday following Tinubu’s signing of four executive orders, as the President ordered the suspension of the 5% excise duty on telecommunications as well as the Import Tax Adjustment levy on certain vehicles.
The association noted that bold intervention through several Executive Orders has been welcomed with great enthusiasm.
Diesel VAT
Mr Adewale-Smatt Oyerinde noted that there the Presidency needs to reconsider the introduction of Value Added Tax of 7.5 per cent on Automated Gas Oil or diesel and the outdated practice of minimum taxation.
He added that these issues, if not addressed, threaten to undermine the gains made by the recent reforms.
- “Our businesses continue to be weighed down by these additional tax burdens; it is high time we reviewed such practices that deter economic growth and create hurdles in the path of doing business.”
The association said it is committed to collaborating closely with the current administration, advocating for further policy changes that could significantly enhance the Nigerian business environment and contribute to national economic prosperity.
Executive orders
Praising the recent executive orders which saw the suspension of the 5% excise duty on telecommunications as well as the Import Tax Adjustment levy on certain vehicles and the change in the date of the implementation of the Finance Act, 2023 from May 23, 2023, to September 1, 2023, they said:
- “In this context, Tinubu’s bold intervention through several Executive Orders has been welcomed with great enthusiasm.
- “Particularly notable are the suspension of the five per cent excise tax on telecommunication services and the excise duties on items like tobacco, beer, wine/spirits, and the 10 per cent green tax by way of excise tax on Single Use Plastics.
- “Additionally, the Import Tax Adjustment of two per cent and four per cent on imported motor vehicles of varying engine capacities has been put on hold.”
NECA added it is genuinely thrilled by the new Executive Orders; urging that the amendments will undeniably enhance the operating environment and alleviate the high cost of doing business in Nigeria, especially in light of the recent fuel subsidy removal.
What you should know
This month, the Federal Inland Revenue Service (FIRS) issued a letter to diesel suppliers in Nigeria, informing them that they are required to pay value-added tax (VAT) on automobile gas oil (AGO) or diesel imported into the country.
The letter was forwarded by the Assistant Comptroller-General of Tariff and Trade, MBA Musa IN, on behalf of the Deputy Comptroller-General of Tariff and Trade to diesel suppliers.
According to the letter, the VAT Modification Order 2021 only exempts petroleum products of HS codes 2709.00.00.00 – 2710.19.12.00 from paying VAT. AGO or diesel falls under HS Code 2710.19.21.00 and is not exempted from paying VAT.
Therefore, all future importations of the product should assess and pay VAT at the point of entry into the country.
The letter also stated 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.
