The Federal Government has announced a value added tax (VAT) exemption for various energy products, including diesel, liquefied natural gas (LNG), also known as cooking gas, Compressed Natural Gas (CNG), electric vehicles, among others, to crash prices.
This is contained in a statement by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Wednesday, October 2nd, 2024.
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 government also announced the introduction of the Notice of Tax Incentives for Deep Offshore Oil & Gas Production that provides new tax reliefs for deep offshore projects.
The statement issued by the Federal Ministry of Finance said;
“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”.
“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”.
However, the Federal Government has bulletined the regulation on Withholding Tax (WHT), setting the implementation date for January 1, 2025.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, disclosed this on his official X-handle on Wednesday.
He said, “The deduction of tax at source (Withholding) Regulations, 2024, has been published in the official gazette”.
“The commencement date of the new regulations is September 30th, 2024, while implementation begins on 1st January 2025 to allow for a minimum of 90 days notice required for tax changes in line with the 2017 National Tax Policy”.
According to Oyedele, the regulation grants rates reduction and full exemption from withholding tax to many businesses, including SMEs with annual turnover not exceeding N25 million.
Furthermore, he stated that there was a provision permitting the Federal Inland Revenue Service (FIRS), with the approval of Finance Minister and Coordinating Minister of the Economy, Wale Edun, to issue guidelines for the implementation of the regulations and, where appropriate, permit early application of the regulations from July 1st.
“The essence of this provision is to enable persons who wish to adopt the regulations early to do so given that it is generally providing reliefs to businesses rather than imposing a burden”, Oyedele suggested.
In July, the Federal Government approved the Oyedele-led committee’s recommendations on the exemption of withholding tax for small businesses, manufacturers, and farmers.
The recommendations were part of the ongoing fiscal policy and tax reforms, setting a new withholding tax regime for the country.
