The Federal Inland Revenue Service, (FIRS), has issued a letter to diesel suppliers in Nigeria, informing them that they are required to pay Value-Added Tax (VAT) on automobile gas oil (AGO), or diesel imported into the country.
The letter, dated June 8th, 2023, and addressed to diesel suppliers, was forwarded by the Assistant Comptroller-General of Tariff and Trade, MBA Musa, on behalf of the Deputy Comptroller-General of Tariff and Trade to diesel suppliers.
According to the letter, the VAT Modification Order 2021 only exempts petroleum products of HS codes 2709.00.00.00 – 2710.19.12.00 from paying VAT. AGO, or diesel, falls under HS Code 2710.19.21.00 and is not exempted from paying VAT.
Therefore, all future importers of the product should assess and pay VAT at the point of entry into the country.
The letter also stated that AGO, or diesel, are not exempted from destination inspection or import guidelines and as such are expected to process Form M and PAAR as well as make declarations appropriately in the NICIS II system.
It further stated that the decision to charge VAT for diesel importations is stated to be in compliance with the VAT Modification Order 2021.
This development comes as a surprise to many diesel suppliers who 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.
