The federal government has introduced a new green tax surcharge on high-engine vehicles, imposing a levy of between 2 per cent and 4 per cent as part of its 2026 fiscal policy measures set to take effect from July 1.
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The policy was disclosed in a government circular seen by Reuters, indicating that the measure forms part of broader fiscal adjustments approved by President Bola Ahmed Tinubu.
The initiative is designed to align Nigeria’s tax framework with environmental objectives while enhancing revenue generation.
The new levy targets vehicles based on engine capacity, with exemptions introduced to protect specific categories and encourage cleaner alternatives.
The policy also comes alongside other fiscal reforms, including revised import tariffs and excise duty changes.
What the report is saying
Reuters noted that the government explained that the green tax is part of a wider strategy to reform fiscal policies and introduce environmentally conscious taxation.
- “ Vehicles with engine sizes of 2,000cc (2-liter) to 3,999cc at a rate of 2%, while vehicles with engines of 4,000cc and above will face a 4% charge,” the report noted.
- “Vehicles with engines below 2,000cc will be exempt, as will mass transit buses, electric vehicles and locally manufactured vehicles.”
- The new levy, Reuters noted, is part of the 2026 fiscal policy package, which includes revised import tariffs, excise duty adjustments, and adoption of the ECOWAS common tariff.”
The government added that a 90-day grace period has been granted to allow importers, manufacturers, and service providers to adjust before full implementation.
Backstory
The introduction of the green tax builds on earlier fiscal policy discussions aimed at expanding Nigeria’s tax base and reducing environmentally harmful consumption patterns.
- In October 2023, the Federal Government announced plans to introduce a green surcharge on imported vehicles to boost revenue.
- In the same year, President Tinubu suspended the 5 per cent excise duty on telecommunications and the import tax adjustment levy on certain vehicles.
- The suspension formed part of a broader effort to curb arbitrary taxation and ease the burden on businesses.
These earlier measures laid the groundwork for a more structured and targeted fiscal approach reflected in the 2026 policy framework.
What you should know
The new green tax is part of a broader overhaul of Nigeria’s fiscal policy architecture aimed at improving efficiency and aligning with regional standards.
In June 2025, President Tinubu signed four major tax reform laws aimed at improving tax administration and compliance.
- These reforms are designed to enhance revenue mobilisation and reduce dependence on oil revenues.
- In March 2026, the Federal Government introduced presumptive tax rules targeting Micro, Small, and Medium Enterprises (MSMEs).
