Federal Government Slaps 5% Surcharge on Local Fossil Fuel Products
The federal government has introduced a new 5 per cent surcharge on fossil fuel products produced or provided within Nigeria, as part of broader tax reforms under the recently signed Tax Act.
According to the legislation, the surcharge will apply to chargeable fossil fuel products—including petrol and diesel—at the earliest point of “supply, sale or payment, whichever occurs first.”
“A surcharge is imposed at 5% on chargeable fossil fuel products provided or produced in Nigeria, and shall be collected at the time a chargeable transaction surcharge occurs,” the Act reads.
The tax applies only to petroleum-based products, excluding cleaner alternatives. “Surcharge shall be computed based on the retail price of all chargeable fossil fuel products,” the Act further states.
However, not all fuels are affected. The Act makes clear that the surcharge “shall not apply to clean or renewable energy products, household kerosene, cooking gas, and compressed natural gas (CNG).”
This move is part of the government’s strategy to align fiscal policy with environmental goals, as fossil fuels are major contributors to greenhouse gas emissions. Clean or renewable energy, defined in the Act as “energy from solar, wind, hydropower, geothermal or plant and animal waste,” is exempt from the surcharge.
The surcharge will be administered and collected monthly by the Federal Inland Revenue Service (FIRS), with the minister authorised to announce the effective date through an official gazette.
The new tax regime comes as the government seeks to boost revenue while incentivising cleaner energy alternatives.
