Prices of Diesel to rise as Customs begins VAT collection

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The Nigeria Customs Service (NCS) has reported that the Service has started the implementation of a directive to collect Value Added Tax (VAT) on Automated Gas Oil (AGO) or diesel imported into the country based on the VAT Modification Order 2021.

While Speaking the National Spokesman of the NCS, Abdullahi Maiwada explained that only petroleum products which fall under HS Code 2709.00.00.00 and HS Code 2710.19.12.00 are exempted from payment of VAT.

According to the Customs National Spokesman, “The NCS collects VAT on behalf of the FIRS. The VAT Modification Order 2021 only exempts petroleum products of HS Code 2709.00.00.00 and HS Code 2710.19.12.00 from payment of VAT.

“AGO is classified under HS Code 2710.19.21.00 and is not exempted from paying VAT based on the VAT Modification Order 2021.

“It is expected that AGO and diesel since they are not exempted from VAT, must process Form M and PAAR and make appropriate declarations under the NICIS 2 system.”

For many diesel suppliers, this development comes as a surprise since they have been importing the product without paying VAT for years.

Some of them have expressed their displeasure and confusion over the new directive, saying that it will increase their cost of doing business and affect their profit margins.

Some of the diesel suppliers, who spoke to newsmen on condition of anonymity, confirmed receipt of the letter and stated that any difference in the cost of doing business due to the changes will be transferred to the end users of the products.