By: News Peddlers
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| Filing station [photo: the Guardian] |
The payment of the 7.5% Value Added Tax on Automotive Gas Oil, also known as diesel, was officially announced by the Federal Government on Monday.
In Abuja, representatives of the Federal Inland Revenue Service and the Nigerian Customs Service reaffirmed that AGO was not exempt from paying VAT in accordance with the VAT Modification Order 2021.
Nigerians, however, criticized the development, pointing out that people were still attempting to adjust to the increase in the pump price of Premium Motor Spirit, more commonly known as petrol, without being aware that plans had been made to further increase prices for diesel.
PUNCH correspondent inquired as to whether the NCS was currently collecting 7.5% VAT on AGO imports, and Abdullahi Maiwada, the service's spokesperson, responded, "Yes."
He continued, “If you ask me whether Customs collect 7.5 per cent VAT on AGO, I will tell you yes and I’ll give you the reasons. There’s what we call VAT Modification Order 2021, which exempts petroleum products of Harmonised System Codes.
“But the HS Codes for Petroleum products that are exempted from paying VAT are those in the region of 2709.00.00.00 – 2710.19.12.00. The HS Codes are what we use to classify commodities. But AGO is classified under HS Code 2710.19.21.00, which is not exempted from the payment of VAT. Now, this is based on the VAT Modification Order 2021.”
Tobi Wojuola, a representative of the FIRS, reaffirmed the development and emphasized that it was in line with the VAT Modification Order's position.
He informed our correspondent in Abuja that "the VAT Modification Order 2021 is in the position that VAT is chargeable on diesel."
The NCS made it clear that VAT must be paid on diesel in a letter to some of its personnel on the subject with the reference: NCS/T&T/T/899/217/VOL.I, sighted in Abuja and dated June 8, 2023.
On behalf of the Deputy Comptroller-General (Tariff and Trade), the letter was signed by Mba Musa, Assistant Comptroller-General (Tariff and Trade).
I am required to forward a letter from the Federal Inland Revenue Service on the aforementioned subject, it stated in part. A VAT.
It read in part, “I am directed to forward a letter from Federal Inland Revenue Service on the above subject matter. The VAT Modification order 2021 only exempts petroleum products of HS codes 2709.00.00.00 – 2710.19.12.00 from payment of VAT. AGO or diesel falls classifiable under HS Code 2710.19.21.00 and is not exempted from paying VAT.
“Subsequent upon the above, all future importations of the product should assess and pay VAT at the point of entry into the country. Also note 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.
“A copy of the letter from FIRS is attached for your information. Take note and be guided accordingly, please
Nigerians React:
Nigerians lamented how the introduction of the 7.5% Value-Added Tax wil affect the cost of diesel.
This occurs just a month after President Bola Tinubu, in his inaugural speech on May 29, removed the subsidy on gasoline, increasing the price of PMS from N188 to roughly N580 in various states of the federation.
Remember that Zainab Ahmed, Minister of Finance, Budget, and National Planning, announced that the Finance Act 2020 increased the country's previous 5% VAT to 7.5% on commodities, including automobile gas oil, and that it went into effect on February 20, 2020.
Honey, bread, cereals, cooking oils, culinary herbs, fish, flour, starch, fruits, meat, poultry, milk, nuts, and pulses are among the items that are exempt from paying sales tax.
(PUNCH)