FG Grants VAT Exemptions to Boost Energy and Oil Sectors

The Federal Government has granted VAT exemptions to the energy and oil sectors. Explore the reasons and potential impact of the exemption.

To boost Nigeria’s energy sector, President Bola Tinubu’s government has announced new tax incentives, including value-added tax exemptions for key energy products and infrastructure.

These exemptions apply to diesel, raw gas, liquefied petroleum gas (LPG), compressed natural gas (CNG), electric vehicles, liquefied natural gas (LNG) infrastructure, and clean cooking appliances.

The government also issued a notice on tax incentives for deepwater oil and gas production, providing new tax breaks for deepwater projects.

These initiatives are part of the government’s efforts to revitalize Nigeria’s oil and gas sector.

The Minister of Finance and Coordinating Minister for Economic Affairs, Wale Edun, announced these tax measures on Wednesday.

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He explained that the VAT exemption is part of the VAT Amendment Regulations, 2024 and the Notification on Tax Incentives for Deepwater Oil and Gas Production, both of which are in line with the Oil and Gas Companies (Tax Incentives, Exemptions, Exemptions etc.) Regulation 2024.

A statement from the Federal Ministry of Finance stressed that these changes are aimed at reducing costs for the energy and petroleum industry, encouraging investment in cleaner energy solutions and supporting Nigeria’s economic growth.

“These measures are aimed at reducing the cost of living, enhancing energy security and accelerating Nigeria’s transition to cleaner energy sources.

“Furthermore, the Deepwater Oil and Gas Production Tax Incentive Notice provides for new tax breaks for deepwater projects.”

The statement added, “The initiative is aimed at establishing Nigeria’s deepwater basins as a leading global oil and gas destination.”

“These reforms are part of a broader investment-focused policy initiative led by His Excellency the President Bola Ahmed Tinubu in line with Policy Guideline 40-42,” it said.

“These reflect the government’s strong commitment to fostering sustainable growth in the energy sector and improving Nigeria’s global competitiveness in oil and gas production.”