In new tax law, FG imposes 5% surcharge on locally produced petroleum products

By Abubakar Yunusa

The new tax law has imposed a 5 percent surcharge on chargeable fossil fuel products.

A surcharge is an additional charge, fee, or tax added to the cost of a good or service beyond the initially quoted price.

Fossil fuel products, including petrol, diesel, and compressed natural gas (CNG), are derived from the processing of fossil fuels like coal, petroleum, and natural gas.

As per TheCable,in the Tax act ,a fossil fuel product becomes chargeable upon the earliest occurrence of supply, sale, or payment.

“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 law states “that the chargeable transaction would be the supply, sale or payment whichever occurs first”.

“Surcharge shall be computed based on the retail price of all chargeable fossil fuel products,” the act further reads.

According to the tax law, the minister may, by an order issued in the official gazette, indicate the effective date of commencement of the administration of the surcharge on fossil fuel products under the chapter.

The Tax Act said the Federal Inland Revenue Service (FIRS) shall administer and collect the surcharge monthly, and may issue regulations for its administration.

However, the act clarified that the surcharge shall not apply to clean or renewable energy products, household kerosene, cooking gas, and compressed natural gas (CNG).

The act defined “clean or renewable energy” as energy from solar, wind, hydropower, geothermal or plant and animal waste, which are naturally replenishing, produce little or no environmental pollution or greenhouse gas emissions, and do not deplete over time.