The federal government has announced a series of Value Added Tax (VAT) exemptions for various energy products, including diesel, Liquefied Natural Gas (LNG), Compressed Natural Gas (CNG), and electric vehicles, in a bid to reduce prices and ease Nigerians’ cost of living.
In a statement released on Wednesday, the minister of finance and coordinating minister of the economy, Wale Edun, emphasised that these measures aim to enhance energy security and accelerate Nigeria’s transition to cleaner energy sources.
According to Edun, the VAT Modification Order 2024 introduces exemptions for key energy products and related infrastructure. The products exempt from VAT include diesel, feed gas, liquefied petroleum gas (LPG), compressed natural gas (CNG), electric vehicles, liquefied natural gas (LNG) infrastructure, and clean cooking equipment. “The introduction of these exemptions is designed to lower the cost of living, bolster energy security, and accelerate Nigeria’s transition to cleaner energy sources,” the statement read.
In addition to the VAT exemptions, the minister also announced the introduction of tax incentives specifically for deep offshore oil and gas operations, as outlined in the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024. This initiative aims to position Nigeria’s deep offshore basin as a leading destination for global investments in oil and gas.
Edun explained that these reforms are part of a broader investment-focused strategy led by President Bola Ahmed Tinubu, in line with Policy Directives 40-42. “The Notice of Tax Incentives for Deep Offshore Oil & Gas Production provides new tax reliefs for deep offshore projects, reflecting the administration’s strong commitment to fostering sustainable growth in the energy sector and enhancing Nigeria’s competitiveness in the oil and gas market,” he stated.
These ongoing tax reform initiatives stem from President Bola Tinubu’s establishment of a tax and fiscal policy committee in August 2023, led by renowned tax expert Taiwo Oyedele. The committee is tasked with developing a new tax framework to promote economic growth and development across Nigeria.
As part of its mandate, the committee has proposed several reforms, including raising the Value Added Tax (VAT) and introducing tax exemptions for low-income earners, among other critical measures.
With these latest initiatives, the federal government aims to alleviate the financial burdens faced by Nigerians while simultaneously attracting much-needed investment into the country’s energy sector.
Safe Skies: Phone Switched Off Or Airplane Mode?