The Value Added Tax (VAT) charged on diesel in Nigeria has been temporarily lifted as part of agreement reached during a meeting between labour unions and a government delegation, Information Minister Mohammed Idris said in a statement.
The waiver is for the next six months to soften the impact of the removal of a petroleum subsidy in the country and its announcement coincided with the 63rd anniversary of the country’s independence on Sunday. The announcement came just days before a national strike was to commence as a protest by the country’s main unions on Tuesday this week. It could not be established if the unions would go ahead with the strike or suspend it.
VAT is administered by the Federal Inland Revenue Service and was introduced in 1986.
The VAT component of the diesel price is currently 7.5%, which was only agreed to in June when it was announced it would increase from 5%.
However, in August, the chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, Taiwo Oyedele, recommended that the tax on diesel should be suspended.
Oyedele said the suspension would help cushion the harsh economic effects of the fuel subsidy removal.
"I think that we should suspend VAT on diesel because we removed the fuel subsidy on petrol on 29 May,” he said during a television appearance in August.
