Value Added Tax (VAT) Order, 2024 -Modification

On September 1, 2024, the Honorable Minister of Finance and Coordinating Minister of the Economy officially signed the Value Added Tax (VAT) (Modification) Order, 2024 (“the Order”). This action was taken in accordance with Section 38 of the VAT Act, Cap. V1, Laws of the Federation of Nigeria, 2004 (as amended). The Federal Government of Nigeria subsequently published the Order in Official Gazette No. 149, Vol. 111 on September 3, 2024.

Effective from September 1, 2024, the Order introduces significant modifications to Parts I and II of the First Schedule of the VAT Act, broadening the list of exempted items under paragraph 2. Notably, the Order also establishes a retrospective commencement date of October 1, 2023, for the amended provisions related to Automotive Gas Oil (AGO).

The First Schedule of the VAT Act delineates specific goods and services exempt from VAT payments. To enhance this framework, the VAT Act empowers the Minister responsible for finance to amend or modify the exempt list as necessary. It is under this authority that the Minister enacted the recent Order.

Summary of Key Changes Introduced by the VAT Modification Order

1. Amendments to VAT-Exempt Goods:
   The Order expands the list of goods exempt from VAT under Part I of the First Schedule to include:
   • Equipment and infrastructure associated with the expansion of Compressed Natural Gas (CNG), including conversion kits.
   • Equipment and infrastructure related to the growth of Liquefied Petroleum Gas (LPG), including conversion kits.
   • Domestic processing facilities and equipment for Liquefied Natural Gas (LNG).
   • Electric vehicles and their components.
   • Parts and semi-knock-down units for the assembly of electric vehicles.
   • Equipment and accessories for biogas and biofuel, promoting clean cooking and transportation.
2. Amendments to VAT-Exempt Services:
   The Order also updates the list of services exempt from VAT under Part II of the First Schedule to include:
   • CNG conversion and installation services.
   • LPG conversion and installation services.
   • Services related to the manufacturing, assembly, and sale of electric vehicles.
3. Redefinition of Petroleum Products:
   A noteworthy modification introduced by the Order is the redefinition of ‘petroleum products.’ The new definition is broader and encompasses a range of items including:
   • Feed gas for all processed gas.
   • Aviation turbine kerosene.
   • Premium motor spirit.
   • Automotive gas oil.
   • Household kerosene.
   • Locally produced liquefied petroleum gas.
   • Compressed natural gas.
   • Imported liquefied petroleum gas.
   • Crude petroleum oils.

These changes are aimed at fostering the growth of clean energy and alternative fuels in Nigeria, aligning with global trends towards sustainability and environmental responsibility.