Price hike looms as customs begins implementation of VAT on diesel

The Nigeria Customs Service (NCS) says it has commenced the implementation of value-added tax (VAT) on automobile gas oil (AGO), also known as diesel, imported into the country.

 

The service made this known in a memo, dated July 28, 2023, sent to all importers and agents of diesel.

 

The memo was titled, ‘Request for Charge of Value Added Tax (VAT) on Autombile Gas Oil (ago) or Diesel Imported into the Country’.

 

The communication, signed by PC Chibuoke (DC admin) on behalf of the area controller, Area I, Port Harcourt; made reference to a “headquarters circular No. NCS/T&T/T/899/217/VOL.I of 27 July 2023 on the above subject matter”.

 “I am directed to inform you that henceforth, Value Added Tax (VAT) is to be charged on Automobile Gas Oil (AGO), and Procedure Code 4900 000 shall be used on all importations of AGO,” the memo reads.

 

The service added that no importer of diesel is allowed to use “additional Code 409 in their declaration”.

 

In 2020, the federal government began the implementation of the Finance Act, which stated that a 7.5 percent VAT would be charged on diesel costs.

 

The development means that the price of diesel, which has been surging, may reach unprecedented highs — further worsening the plight of Nigerians and manufacturers.

 

In July 2023, the price of a litre of the product increased to N794.48 a litre, compared to N774.38 per litre in the corresponding period last year, according to the National Bureau of Statistics (NBS).