Federal Government Grants 100% VAT Waiver on CNG and LPG
The Federal Government has given its approval for a zero percent Value Added Tax (VAT) waiver on Feed Gas for all processed, Compressed Natural Gas (CNG), and imported liquified petroleum gas, effective immediately.
This VAT-free waiver also encompasses CNG equipment components, conversion and installation services, Liquified Petroleum Gas (LPG) equipment components, conversion and installation services, as well as all equipment and infrastructure related to the expansion of CNG, LPG, and the Presidential CNG Initiative, including conversion kits.
In a circular, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, instructed the Nigeria Customs Service (NCS) and Federal Inland Revenue Service (FIRS) to promptly apply a zero percent (0%) VAT rate on the specified items. The circular is titled ‘Fiscal Incentives for the Presidential Gas for Growth Initiative.
“In line with His Excellency, Mr President’s commitment to improve the investment climate in Nigeria, and to increase the utilisation and supply of gas in the domestic market:
“According to Part 1, Section 5 of the Customs and Excise Tariff Act, which grants an Import Duty Waiver on machinery, equipment, and spare parts imported into Nigeria for the utilization of Nigerian gas (‘Gas Utilization Waiver’), the importation of all equipment related to Compressed Natural Gas and Liquefied Petroleum Gas into the Nigerian market shall attract zero percent (0%) import duty rate.
“The eligible Compressed Natural Gas and Liquefied Petroleum Gas equipment covered by the existing Gas Utilization Waiver is outlined in the attached Appendix: Consequently, the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) are hereby directed to apply a zero percent (0%) Value Added Tax (VAT) rate on the following items;
a. Feed Gas for all processed gas
b. Compressed Natural Gas
c. Imported liquified petroleum gas
d. Compressed Natural Gas (CNG) equipment components, conversion and installation services i.e. Liquified Petroleum Gas (LPG) equipment components, conversion and installation services;
“All equipment and infrastructure related to the expansion of Compressed Natural Gas (CNG), Liquified Petroleum Gas (LPG) and the Presidential CNG Initiative, including conversion kits.”
The minister further directed that all applications for Import and Customs Duty exemption to CNG equipment shall require a letter of support from the Office of the Special Adviser to the President on Energy.
He also directed that the importation of LPG under HS Codes 2711.12.OO.OO, 2711.13.OO.OO and 2711.19.OO.OO are exempt from Import Duty and Value-Added Tax.
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“As a result, 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 should be withdrawn by the Nigeria Customs Service in line with the previous approval.
“The implementation of the tariff review for the CNG and LPG sub-sector takes immediate effect from the date of this circular. Please ensure strict and prompt compliance,” the circular said.
