The Nigerian Customs Service (NCS) has written to diesel suppliers in the country on a new fiscal measure requiring them to pay Value Added Tax (VAT) on automobile gas oil (AGO) or diesel imported into the country.
The Service’s Assistant Comptroller-General of Tariff and Trade, MBA Musa, in a letter issued on behalf of the Deputy Comptroller-General of Tariff and Trade dated June 8th, 2023 addressed to diesel suppliers, claimed that the letter was based on the Federal Inland Revenue Service’s (FIRS’) letter dated 31st May 2023.
According to him, based on the FIRS’ letter, the VAT Modification Order 2021 only exempts petroleum products of HS codes 2709.00.00.00 – 2710.19.12.00 from paying VAT and that AGO or diesel falls under HS Code 2710.19.21.00 and is not exempted from paying VAT, which implies that all future importations of the product should assess and pay VAT at the point of entry into the country.
The letter further clarified that AGO or diesel was not exempted from destination inspection or import guidelines and as such an importer is expected to process Form M and PAAR make declarations appropriately in the NICIS II system in compliance with the VAT Modification Order 2021.
The NCS’ letter to the diesel suppliers stated: “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”, it added.
Economists believe that latest fiscal measure of imposing 7.5% VAT on imported AGO will increase the suppliers cost of doing business and further negatively on the economy based on inflationary effects on manufactured goods.
