The Federal Government has announced value added tax (VAT) exemptions for various energy products, including diesel, Liquefied Natural Gas (LNG), Compressed Natural Gas (CNG), and electric vehicles, among others, in order to reduce prices.
This is contained in a statement by The Minister of Finance and Coordinating Minister of the Economy Mr. Wale Edun, on Wednesday.
According to Edun, these measures aim to reduce the cost of living, enhance energy security, and speed up Nigeria’s shift to cleaner energy sources.
“The VAT Modification Order 2024 introduces exemptions on a range of key energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
“These measures are designed to lower the cost of living, bolster energy security, and accelerate Nigeria’s transition to cleaner energy sources,” the statement read in part.
Tax Incentives for Deep Offshore Oil & Gas Production
In addition, the Minister also announced the introduction of tax incentives for deep offshore oil operations and gas production, as outlined in the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024.
Edun stated that the initiative is designed to establish Nigeria’s deep offshore basin as a leading destination for global oil and gas investments.
He explained that these reforms are part of a broader set of investment-focused policy initiatives led by His Excellency, President Bola Ahmed Tinubu, in accordance with Policy Directives 40-42.
“In addition, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production provides new tax reliefs for deep offshore projects. This initiative is aimed at positioning Nigeria’s deep offshore basin as a premier destination for global oil and gas investments.
“These reforms are part of a broader series of investment-driven policy initiatives championed by His Excellency, President Bola Ahmed Tinubu, in line with Policy Directives 40-42.
“They reflect the administration’s strong commitment to fostering sustainable growth in the energy sector and enhancing Nigeria’s global competitiveness in oil and gas production” Edun added.
What you should know
The federal government’s ongoing tax reform initiative was introduced after President Bola Tinubu established a tax and fiscal policy committee in August 2023, led by renowned tax expert Taiwo Oyedele.
The committee is responsible for developing a new tax framework aimed at driving economic growth and development nationwide.
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 key measures.
(Nairametrics)
