Nigeria exempts 63 items from value-added tax to boost oil and gas industry
In a bid to revitalize the oil and gas sector, the Federal Government has announced the exemption of 63 essential items from Value-Added Tax (VAT). This move follows Minister of Finance Wale Edun’s unveiling of concessions aimed at stimulating growth in the industry.
The exempted items, as outlined in the official gazette for the “Value Added Tax (Modification) Order, 2024,” cover a wide range of equipment, machinery, and materials crucial for the oil and gas sector.
These include vehicles, electrical equipment, pipes, valves, and storage tanks, as well as specialized machinery for liquefied natural gas (LNG) and liquefied petroleum gas (LPG) processing.
The exemptions also extend to biofuels and biogas equipment, including biogas digesters, compressors, and dehydration units. Additionally, chemicals and reagents used in the oil and gas industry, such as LNG-related chemicals and biofuel-related enzymes, are now VAT-exempt.
The provisions for Automotive Gas Oil (AGO) took effect on October 1, 2023. This latest development is expected to boost Nigeria’s upstream and downstream sectors, attracting investment and stimulating economic growth.
According to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, the exemptions are a strategic move to support the oil and gas industry. The announcement was made on X, highlighting the government’s commitment to revitalizing the sector.
The VAT exemptions are part of a broader package of fiscal incentives introduced by the government. These include the VAT Modification Order 2024 and tax incentives for deep offshore oil and gas production, as outlined in the Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024.
Industry experts hail this move as a significant step towards boosting Nigeria’s oil and gas industry, creating a more conducive business environment, and attracting foreign investment.
The Federal Government’s efforts to revitalize the sector are expected to have a positive impact on the economy, creating jobs and stimulating growth in related industries.
