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Nigeria exempts cooking gas importation from VAT, Customs Duty

Cooking Gas Cylinders

*Olawale Edun, Minister for Finance and Coordinating Minister of the Economy, says the move is part of the Federal Government’s commitment to improving the investment climate, increasing Liquefied Petroleum Gas supply locally, reducing market prices, and promoting clean cooking practices in the country

Isola Moses | ConsumerConnect

As part of Nigeria’s commitment to enhancing investment climate while promote clean cooking practices, the Federal Government has exempted the importation of Liquefied Petroleum Gas (LPG), otherwise  known as cooking gas, and its equipment from the payment of Customs Duty and Value-Added Tax (VAT).

ConsumerConnect reports the development is expected to culminate in a regime of reduced costs of cooking gas in the West African country.

Mr. Olawale Edun, Honourable Minister for Finance and Coordinating Minister of the Economy

The government disclosed this in a letter dated November 28, 2023, signed by Mr. Olawale Edun, Honourable Minister for Finance and Coordinating Minister of the Economy, and addressed to the Special Adviser to the President on Energy; Comptroller-General of the Nigeria Customs Service (NCS), and Executive Chairman of the Federal Inland Revenue Service (FIRS).

The Ministry of Finance noted that the exemption aligned with President Bola Ahmed Tinubu’s commitment to accelerating the country’s investment climate, and promoting clean cooking practices.

The letter stated in part: “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, I hereby affirm Presidential directive dated July 29, 2022, with reference number PRES/88/MPR/99.

“Accordingly, the importation of LPG utilising HS Codes 2711.12.00.00, 2711.13.00.00 and 2711.19.00.00 is exempt from Import Duty and Value-Added Tax. Consequently, the Importation of LPG shall incur a 0% duty rate and 0% VAT rate, effective immediately.”

The Ministry equally directed the NCS and FIRS to comply with the directive, pending its official gazetting.

Besides, the Ministry instructed the Nigeria Customs Service to comply with the Presidential directive of July 29, 2022, and withdraw all debit notes earlier issued to petroleum marketers who have imported LPG “using codes 2711.1.2.00.00 and 2711.13.00.00 from August 26, 2019, to the present date”.

Other items exempted from VAT and Customs duty payment are LPG cylinders, LPG cascades, gas leak detectors, steel pipes, steel valves and fittings, LPG dispensers, gas generators, LPG trucks, among others.

Fiscal directive to enhance investments in LPG industry -Presidential aide

Speaking on the exemptions of cooking gas importation and other items from VAT and Customs Duty, Olu Verheijen, Special Adviser to the President on Energy, said the decision was prompted after consultations with stakeholders indicated that lack of a clear fiscal directive had hindered investments in the LPG sector of the Nigerian economy.

Verheijen stated this while informing the Chairman of the Nigerian Alliance for Clean Cooking of the exemptions in a separate letter, dated November 30, 2023.

The Presidential aide noted the paucity of investments in the sector has led to increments in prices of Cooking Gas and considerable increase in the use of “unhealthy fuels, such as kerosene” in the country.

It is recalled the Federal Government, in 2019, was reported to have removed VAT on LPG in Nigeria.

However, with the reintroduction of the tax in 2021, the government began the implementation of the 7.5 percent tax on imported LPG, while  still exempting locally manufactured gas.

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