Value-added tax (VAT) and customs duties are not applicable to the import of liquefied petroleum gas (LPG) or its equipment, according to the federal government.
It is anticipated that the action will lower cooking gas prices across the nation.
In a letter dated November 28, 2023, the ministry of finance revealed this to the chairman of the Federal Inland Revenue Service (FIRS), the comptroller-general of the Nigeria Customs Service (NCS), and the special adviser to the president on energy.
Wale Edun, the finance minister and coordinating minister for the economy, signed the letter.
The ministry claims that the exemption is in line with President Bola Tinubu’s pledge to improve Nigeria’s investment environment and encourage the use of clean cooking methods.
“I hereby affirm Presidential directive dated July 29, 2022, with reference number PRES/88/MPR/99,” the letter states, “in line with His Excellency, President Bola Tinubu’s commitment to improving the investment climate in Nigeria, increasing the supply of LPG to meet local demand, reducing market prices and promoting clean cooking practices.”
As a result, import duties and value-added tax are not applied to LPG imported under HS Codes 2711.12.00.00, 2711.13.00.00, and 2711.19.00.00. As a result, starting right away, there will be no duty or VAT applied to the import of LPG.
The government directed the FIRS and NCS to follow the order while it was being formally gazetted.
The ministry further instructed the NCS to revoke all debit notes given to petroleum marketers that imported LPG “using codes 2711.1.2.00.00 and 2711.13.00.00 from August 26, 2019, to the present date” in accordance with the presidential decree of July 29, 2022.
LPG cylinders, LPG cascades, gas leak detectors, steel pipes, steel valves and fittings, LPG dispensers, gas generators, LPG trucks, and other items are also free from VAT and duty payments.
The decision was made, according to Olu Verheijen, the president’s special energy adviser, after stakeholder engagements indicated that investments in the LPG industry had been hampered by the absence of a clear fiscal mandate.
She said this while notifying the Nigerian Alliance for Clean Cooking’s chairman in a separate letter dated November 30, 2023, of the exemptions.
According to Verheijen, the lack of investment caused cooking gas costs to rise and the use of “unhealthy fuels such as kerosene” to increase.
In Nigeria, the FG eliminated the VAT on LPG in 2019.
But the FG started applying the 7.5 percent tax on imported LPG in 2021, reviving the tariff and exempting domestically produced petrol.
