VAT: FG Exempts 63 Key Items To Boost Economic Growth

The federal government has removed 63 key items from Value-Added Tax (VAT) as part of its fiscal reforms intended to stimulate economic growth.

Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, disclosed this in an official gazette dated September 3, 2024, which he posted on X (formerly Twitter) on Friday.

The move was to incentivise investment in green energy and encourage industrial growth.

Oyedele said the new fiscal measures included the formal extension of VAT suspension on diesel as well as granting VAT exemptions on clean energy and sustainable transportation.

He wrote: “A new order has been issued to formalise and extend the suspension of VAT on diesel. In addition, the order grants VAT exemption on CNG, electric vehicles, biogas, and biofuel equipment and accessories for clean cooking and transportation.”

The exemption covers critical components and equipment for electric vehicles, compressed natural gas (CNG) and liquefied petroleum gas (LPG) vehicles, biogas production, and liquefied natural gas (LNG) processing.

Some other items exempted from VAT were electric vehicles (EVs), CNG/LPG Dual Fuel Vehicles, Dedicated LPG Vehicles and CNG/LPG Dual Fuel Vehicles, Parts, and semi-knocked down units (for assembly) of CNG and LPG Buses, Steel Valves & Fittings, steel pipes, storage tanks, Pressure-reducing valves, CNG Pumps and Compressors, steel, Hydraulic press/Rolling machine, Liquid Level Guage, Truck Chassis, gas water heaters, Cylinder refurbishment equipment, Blending skid/unit, Bio-ethanol refinery equipment and feed gas.

The VAT exemption was retroactively applied to Automotive Gas Oil (AGO), commonly known as diesel, from October 1, 2023.

The federal government recently unveiled a set of fiscal incentives and concessions designed to bolster operations in the nation’s upstream and downstream sectors of the economy.

Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, who unveiled the two major fiscal incentives on Wednesday, said that they were part of overall measures to revitalise Nigeria’s oil and gas sector.