The Nigerian government has announced plans to introduce a “green surcharge on imported vehicles” as part of its ambitious plan to boost tax revenues.
The FG made this known in a recently released Medium Term Expenditure Framework (MTEF), which outlines a hefty 2024 budget of N26 trillion.
The green surcharge or levy is a tax imposed by a government on sources of pollution or carbon emission. It is aimed at discouraging the use of inefficient sources of energy and encouraging the implementation of environmentally friendly alternatives. The term is most commonly used in relation to a tax on fuel-inefficient vehicles.
The green surcharge is a key component of the government’s strategy to generate approximately N2.6 trillion in net taxes through Nigerian Customs.
The MTEF document lays out a total of 18 strategies aimed at enhancing Customs revenue collection between 2024 and 2026, with point XIII focusing on the introduction of a green surcharge on imported vehicles.
“Introduction of green surcharge on imported vehicles and excise duty on gambling and lotteries including online betting;”
The specific nature of this green surcharge remains somewhat elusive, as the document does not provide a detailed explanation.
However, earlier in the year, the Buhari administration had hinted at the introduction of additional taxes for imported vehicles.
To this end, the Federal Government had already implemented the Import Adjustment Tax (IAT) levy on motor vehicles, applying a 2% rate to vehicles with 2-litre engines (ranging from 2000 cc to 3999 cc) and a 4% rate to vehicles with engines exceeding 4 litres (4000 cc and above), effective from June 1, 2023.
Furthermore, starting from the same date, certain categories of vehicles were granted exemptions, including vehicles with engines below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles.
