EXPLAINER: What to Know About Customs’ Tax Exemptions on Pharma Materials
By Tahir Ahmad
The Nigeria Customs Service (NCS) has begun implementing a new policy that exempts critical pharmaceutical raw materials from Value Added Tax (VAT) and import duties for two years.
This measure, part of a Presidential Executive Order approved by President Bola Ahmed Tinubu, aims to reduce medical costs and boost local manufacturing of healthcare products.
What Items Are Covered?
The exemption applies to essential materials used in pharmaceutical production, including:
– Active Pharmaceutical Ingredients (APIs) – The core components in drug manufacturing.
– Excipients – Substances used in drug formulation to enhance stability and effectiveness.
– Long-Lasting Insecticidal Nets (LLINs) – Used in malaria prevention.
– Rapid Diagnostic Kits & Reagents – Vital for quick disease detection.
– Pharmaceutical Packaging Materials – Necessary for drug storage and distribution.
Who Is Eligible?
Only pharmaceutical manufacturers officially recognized by the “Federal Ministry of Health and Social Welfare” can benefit from the exemption.
Additionally, eligible companies must have a “valid Tax Identification Number (TIN)” to ensure compliance.
Why Is This Policy Important?
The initiative is designed to:
– Lower production costs for essential medicines.
– Encourage domestic pharmaceutical investment.
– Improve affordability and accessibility of healthcare products.
– Enhance Nigeria’s self-sufficiency in the medical sector.
How Will It Be Monitored?
To maintain transparency, the NCS will publish “quarterly reports” detailing:
– Names of importers.
– Quantity of exempted materials.
– Value of imported items.
This ensures that the policy is benefiting the right stakeholders and prevents misuse.
What Comes Next?
The NCS has pledged full support to manufacturers and other stakeholders for the smooth implementation of this directive.
If effectively executed, the policy could strengthen Nigeria’s healthcare system, reduce reliance on foreign medical imports, and stimulate job creation in the sector.
