FG Slashes Vehicle Import Levies as Dealers Await Green Tax Clarity

The Federal Government’s reduction in import levies on vehicles has officially come into effect, raising expectations of lower vehicle prices while prompting motor dealers to seek clarification on the newly introduced Green Tax before assessing the policy’s overall impact.

Implemented under the 2026 Fiscal Policy Measures, the revised tariff regime reduces the import levy on new vehicles from 20 per cent to 10 per cent, while the levy on used vehicles has been cut from 15 per cent to five per cent. The government says the measure is intended to lower import costs, stimulate economic activity and provide relief for businesses and consumers.

Alongside the levy reductions, a Green Tax Surcharge has been introduced on selected categories of imported vehicles as part of the government’s drive to promote environmental sustainability. However, industry stakeholders say uncertainty surrounding the scope and rate of the surcharge makes it difficult to determine whether the changes will ultimately result in lower vehicle prices.

Speaking to Vanguard, the President of the National Association of Motor Dealers and Chief Executive Officer of Mitchel Automobile Limited, Prince Ajibola, welcomed the reduction in import levies but said the policy’s benefits would largely depend on the level of the Green Tax.

“We don’t know what the surcharge is going to be. If they reduce the levy on vehicles and then introduce another surcharge, we need to know how much it is before we can say there will be any considerable change,” he said.

Ajibola described the reduction in the levy on used vehicles from 15 per cent to five per cent as a significant concession but warned that the gains could be eroded if the Green Tax offsets the savings.

“If the surcharge is far less than what has been reduced, then it’s a plus. But if it is the same or even higher, then it has not really changed anything,” he added.

He noted that import duties remain one of the major factors driving up vehicle prices in Nigeria, alongside the continued challenges posed by foreign exchange fluctuations.

According to him, the revised policy could reduce vehicle prices, particularly for commercial vehicles where the tariff reduction is more substantial, provided the Green Tax remains modest.

“The development is a very good one. There’s no doubt about that. But to know exactly how it will affect prices, we need to know what the Green Tax is. If it is very little, then the reduction in levies will still be significant and consumers will feel the impact,” Ajibola said.

Industry stakeholders said they would continue to monitor the implementation of the revised fiscal measures as the Nigeria Customs Service rolls out the new tariff structure.

They added that greater clarity on the Green Tax would be crucial in determining whether the levy reductions translate into meaningful price relief for vehicle buyers.