FG's New Green Tax: Everything You Need to Know Plus 10 Key Items Affected by the New Import Duties
The Federal Government has commenced the implementation of its Green Tax Surcharge, a new environmental levy designed to reduce carbon emissions while encouraging the importation of cleaner vehicles into Nigeria.
The policy, which took effect on July 1 under the 2026 Fiscal Policy Measures, is being implemented by the Nigeria Customs Service (NCS) alongside a broader review of import tariffs and excise duties affecting vehicles, food items, industrial inputs and other products.
Source: UGC
While the Green Tax has raised concerns among vehicle importers and clearing agents about its potential impact on costs, the Federal Government insists the measure is part of a wider reform aimed at promoting environmental sustainability, reducing inflation through lower tariffs on selected goods, and aligning Nigeria's trade policy with global best practices.
What is the Green Tax?
The Green Tax is an environmental surcharge imposed on selected imported vehicles, particularly those with larger engine capacities that emit higher levels of carbon dioxide.
Rather than applying to all imported vehicles, the levy specifically targets higher-engine petrol and diesel vehicles, while exempting electric vehicles, mass transit buses and locally manufactured vehicles.
The government says the policy is intended to discourage the importation of high-emission automobiles and encourage cleaner transportation alternatives.
The surcharge forms part of the Federal Government's broader fiscal reforms introduced for 2026, combining environmental objectives with customs and tariff adjustments.
How is the policy being implemented?
Implementation officially began on July 1, with the Nigeria Customs Service collecting the surcharge during the customs clearance process for eligible imported vehicles.
Ahead of the rollout, Customs organised nationwide sensitisation programmes for freight forwarders, licensed customs agents, importers and other stakeholders to explain the new fiscal measures and ensure compliance.
According to the agency, the initiative is aimed at ensuring a smooth transition while promoting transparency in the implementation process.
Besides introducing the Green Tax, the government also reduced import levies on new and used vehicles and reviewed tariffs on several essential commodities and industrial inputs to cushion the impact of the new policy.
What impact could the Green Tax have?
For the government, the policy is expected to support climate goals by discouraging the importation of high-emission vehicles, promoting cleaner transport options and generating additional revenue for environmental initiatives.
However, stakeholders believe the surcharge could increase the landing cost of certain imported vehicles, particularly large Sport Utility Vehicles (SUVs) and luxury automobiles, with the additional costs likely to be passed on to buyers.
At the same time, reductions in import duties on passenger vehicles and several essential goods are expected to offset some of the cost pressure created by the Green Tax and help moderate inflation in selected sectors.
Key items reviewed in FG's new Green Tax and fiscal measures
The implementation of the Green Tax comes with several notable changes to import duties and levies across different product categories.
1. Brand-new passenger vehicles
Import levy on new vehicles has been reduced from 20 per cent to 10 per cent, while the overall import duty on fully built passenger vehicles has also been lowered under the new fiscal measures.
2. Used vehicles
The import levy on used vehicles has been cut from 15 per cent to five per cent, reducing the tax burden on importers.
3. Higher-engine petrol vehicles
Imported petrol vehicles with engine capacities above 2,000cc now attract a Green Tax surcharge ranging from two to four per cent, depending on engine size.
4. Large diesel vehicles
Selected diesel-powered vehicles with higher engine capacities are also covered by the environmental surcharge as part of efforts to discourage high-emission imports.
5. Electric vehicles (EVs)
Electric vehicles remain exempt from the Green Tax, reflecting the government's plan to encourage cleaner mobility and lower carbon emissions.
6. Mass transit buses
Mass transit buses are exempt from both the Green Tax and some import duties to prevent higher transportation costs for commuters.
7. Agricultural and manufacturing machinery
Import duties on agricultural and manufacturing machinery have been removed completely to support local production and reduce business costs.
8. Rice
Import duty on bulk rice has been reduced from 70 per cent to 47.5 per cent as part of efforts to improve food affordability.
9. Crude palm oil
The tariff on crude palm oil has been lowered from 35 per cent to 28.75 per cent.
10. Raw sugar
Import duties on different categories of raw sugar have been reduced from 70 per cent to between 55 per cent and 57.5 per cent.
Source: UGC
As implementation begins, the success of the Green Tax will largely depend on how importers, dealers and consumers respond to the new regime.
While the government expects the policy to accelerate the adoption of cleaner vehicles and strengthen environmental protection, many stakeholders will be watching closely to see whether the combination of lower import duties and the new surcharge ultimately translates into more affordable imports or higher prices for consumers.
Source: Legit.ng
