The Federal Government has confirmed that it had begun the implementation of the payment of 7.5 percent Value Added Tax (VAT) on Automotive Gas Oil, popularly called diesel.
Officials of the Nigeria Customs Service and Federal Inland Revenue Service confirmed this in Abuja, stressing that AGO was not exempted from the payment of VAT based on the VAT Modification Order 2021.
The development was, however, condemned by Nigerians, who pointed out that citizens were still trying to adjust to the hike in the pump price of Premium Motor Spirit, popularly called petrol, not knowing that plans had been perfected to further raise payments for diesel.
When asked by our correspondent if the NCS was now collecting 7.5 percent VAT on the imports of AGO, the spokesperson for the service, Abdullahi Maiwada, replied, ‘Yes.’
He continued, ‘If you ask me whether Customs collect 7.5 percent 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.’
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‘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.
‘The position of the VAT Modification Order 2021 is that VAT is chargeable on diesel,’ he told newspaper.
In a letter from the NCS to some of its personnel, on the matter, with reference: NCS/T&T/T/899/217/VOL.I, sighted in Abuja, and dated June 8, 2023, the service made it clear that VAT must be paid on diesel.
The letter was signed by the Assistant Comptroller-General (Tariff and Trade), Mba Musa, on behalf of the Deputy Comptroller-General (Taritf and Trade).
It read in part, ‘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.’
Meanwhile, Nigerians are lamenting the effects of the introduction of the 7.5 percent Value-Added Tax on the price of diesel.
This comes barely a month after President Bola Tinubu removed the subsidy on petrol during his inaugural speech on May 29, 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 percent VAT of the country to 7.5 percent on commodities including automobile gas oil and it was implemented on February 20, 2020.
But 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.
While other commodities have been VAT-compliant, diesel was not until recently.
However, the new development has hit Nigerians hard, as many have called for an utmost review of it, especially because of the recent removal of fuel subsidies.