The Federal Government has introduced value added tax (VAT) exemptions on various energy products, including diesel, compressed natural gas (CNG), liquefied natural gas (LNG), and electric vehicles.
This was recently announced by the Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, in a statement.
According to Mr. Edun, the VAT exemptions are part of the new VAT Modification Order 2024, which aims to lower the cost of living, improve energy security, and promote the use of environmentally friendly energy solutions.
The order also extends VAT exemptions to key energy infrastructure such as liquefied petroleum gas (LPG) and clean cooking equipment.
“These measures are designed to bring down energy prices, strengthen energy security, and fast-track Nigeria’s shift to more sustainable energy sources,” Mr. Edun said.
In addition to the VAT relief on energy products, the federal government has introduced tax incentives for deep offshore oil and gas projects. The incentives, outlined in the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024, are aimed at making Nigeria’s deep offshore basin a top destination for global investments in oil and gas.
“These tax incentives for deep offshore oil and gas production are part of broader investment-driven policies championed by President Bola Ahmed Tinubu, under Policy Directives 40-42,” Mr. Edun explained.
“They are designed to position Nigeria as a leading player in the global oil and gas industry and to support sustainable growth in the energy sector.”
The VAT exemptions and tax incentives come as part of the government’s ongoing tax reform initiative, spearheaded by the tax and fiscal policy committee led by Mr. Taiwo Oyedele. The committee, established by President Tinubu in August 2023, is tasked with creating a new tax framework to boost economic growth and development across Nigeria.