Adedapo Adesanya
By Adedapo Adesanya
The federal government has exempted imported Liquefied Petroleum Gas (LPG) and its equipment from the payment of customs duty and value-added tax (VAT), a move expected to result in a drop in the cost of cooking gas in the country and bring much-needed succour to Nigerians.
This was disclosed by the Minister of Finance, Mr Wale Edun, in a letter (dated November 28, 2023) to the Special Adviser to the President on Energy; the Comptroller-General of the Nigeria Customs Service (NCS); and the Chairman of the Federal Inland Revenue Service (FIRS).
Recall that in 2019, the federal government had removed VAT on LPG in Nigeria but it was reintroduced in 2021 as the Mr Muhammadu Buhari-led administration commenced implementation of the 7.5 per cent tax on imported LPG — exempting locally manufactured gas.
According to the ministry, the exemption aligned with President Bola Tinubu’s commitment to enhance Nigeria’s investment climate, and promote clean cooking practices.
“In line with 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,” a part of the letter read.
“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,” it added.
The ministry instructed the NCS and FIRS to comply with the directive pending its official gazetting.
Also, the ministry directed the Customs to comply with the presidential directive, dated July 29, 2022, and withdraw all debit notes 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 duty payment are LPG cylinders, LPG cascades, gas leak detectors, steel pipes, steel valves and fittings, LPG dispensers, gas generators, and LPG trucks, among others.
On her part, the Special Adviser to the President on Energy, Mrs Olu Verheijen, said the decision was prompted after consultations with stakeholders revealed that the lack of a clear fiscal directive has hindered investments in the LPG sector.
She spoke while informing the chairman of the Nigerian Alliance for Clean Cooking of the exemptions in a separate letter, dated November 30, 2023.
Mrs Verheijen said the paucity of investment led to a rise in the prices of cooking gas and an uptick in the use of “unhealthy fuels such as kerosene”.
