This note seeks to clarify matters arising regarding the 5% fuel surcharge in the new tax laws. The charge is not a new tax introduced by the current administration. The provision already exists under the Federal Roads Maintenance Agency (Amendment) Act, 2007. Its restatement in the new Tax Act is for harmonisation and transparency rather than immediate implementation.
We outline the frequently asked questions below and provide clarifying explanations.
๐ ๐ซ๐๐ช๐ฎ๐๐ง๐ญ๐ฅ๐ฒ ๐๐ฌ๐ค๐๐ ๐๐ฎ๐๐ฌ๐ญ๐ข๐จ๐ง๐ฌ
๐1. ๐๐ฌ ๐ข๐ญ ๐ญ๐ซ๐ฎ๐ ๐ญ๐ก๐๐ญ ๐๐ข๐ง๐ฎ๐๐ฎโ๐ฌ ๐๐๐ฆ๐ข๐ง๐ข๐ฌ๐ญ๐ซ๐๐ญ๐ข๐จ๐ง ๐ข๐ง๐ญ๐ซ๐จ๐๐ฎ๐๐๐ ๐ 5% ๐ฌ๐ฎ๐ซ๐๐ก๐๐ซ๐ ๐ ๐จ๐ง ๐๐ฎ๐๐ฅ?
A1. No. The surcharge is not new. It already exists under the Federal Roads Maintenance Agency (Amendment) Act, 2007 (FERMA Act). The new Tax Act only restates it for harmonisation and transparency. Hence, it was not part of the original tax reform bills submitted by the president to the National Assembly.
๐2. ๐๐จ๐๐ฌ ๐ญ๐ก๐ข๐ฌ ๐ฆ๐๐๐ง ๐ญ๐ก๐ ๐ฌ๐ฎ๐ซ๐๐ก๐๐ซ๐ ๐ ๐ฐ๐ข๐ฅ๐ฅ ๐๐จ๐ฆ๐ฆ๐๐ง๐๐ ๐ข๐ง ๐๐๐ง๐ฎ๐๐ซ๐ฒ 2026 ๐ฐ๐ก๐๐ง ๐ญ๐ก๐ ๐ง๐๐ฐ ๐ญ๐๐ฑ ๐ฅ๐๐ฐ๐ฌ ๐ญ๐๐ค๐ ๐๐๐๐๐๐ญ?
A2. No. The surcharge does not take effect automatically with the new tax laws. It will only commence when the Minister of Finance issues an order published in the Official Gazette as stated under Chapter 7 of the Nigeria Tax Act, 2025. This safeguard ensures careful consideration of timing and economic conditions before implementation.
๐3. ๐๐ข๐ฅ๐ฅ ๐ญ๐ก๐ ๐ฌ๐ฎ๐ซ๐๐ก๐๐ซ๐ ๐ ๐๐ฉ๐ฉ๐ฅ๐ฒ ๐ญ๐จ ๐๐ฅ๐ฅ ๐๐ฎ๐๐ฅ ๐ฉ๐ซ๐จ๐๐ฎ๐๐ญ๐ฌ?
A3. No. Several energy products used by households are exempt. This includes household kerosene, cooking gas (LPG), and compressed natural gas (CNG). Clean and renewable energy products are also excluded to align with Nigeriaโs energy transition agenda.
๐4. ๐๐ก๐ฒ ๐ง๐จ๐ญ ๐๐๐จ๐ฅ๐ข๐ฌ๐ก ๐ญ๐ก๐ ๐๐ก๐๐ซ๐ ๐, ๐ ๐ข๐ฏ๐๐ง ๐ญ๐ก๐ ๐๐ฎ๐ซ๐ซ๐๐ง๐ญ ๐ก๐๐ซ๐๐ฌ๐ก๐ข๐ฉ ๐๐ง๐ ๐ญ๐ก๐ ๐ซ๐ข๐ฌ๐ค ๐จ๐ ๐ก๐ข๐ ๐ก๐๐ซ ๐ข๐ง๐๐ฅ๐๐ญ๐ข๐จ๐ง?
A4. The surcharge is designed as a dedicated fund for road infrastructure and maintenance. If implemented effectively, it will provide safer travel conditions, reduce travel time and cost, lower logistics costs and vehicle maintenance expenses, which will benefit the wider economy. This practice is virtually universal with over 150 countries imposing various charges ranging between 20% to 80% of fuel products to guarantee regular investment in road infrastructure.
๐5. ๐๐ก๐ฒ ๐๐๐งโ๐ญ ๐ฌ๐๐ฏ๐ข๐ง๐ ๐ฌ ๐๐ซ๐จ๐ฆ ๐๐ฎ๐๐ฅ ๐ฌ๐ฎ๐๐ฌ๐ข๐๐ฒ ๐ซ๐๐ฆ๐จ๐ฏ๐๐ฅ ๐๐ ๐ฎ๐ฌ๐๐ ๐ข๐ง๐ฌ๐ญ๐๐๐?
A5. While subsidy savings will provide some funding, they are insufficient to meet Nigeriaโs huge and recurring road infrastructure needs among other public finance needs. A dedicated fund ensures reliable and predictable financing for roads, complementing the budget and ensuring roads are not left underfunded.
๐6. ๐๐ฌ๐งโ๐ญ ๐ญ๐ก๐ข๐ฌ ๐๐ญ ๐จ๐๐๐ฌ ๐ฐ๐ข๐ญ๐ก ๐ญ๐ก๐ ๐ซ๐๐๐จ๐ซ๐ฆ ๐จ๐๐ฃ๐๐๐ญ๐ข๐ฏ๐ ๐จ๐ ๐ซ๐๐๐ฎ๐๐ข๐ง๐ ๐ญ๐๐ฑ๐๐ฌ ๐๐ง๐ ๐๐๐ฌ๐ข๐ง๐ ๐ญ๐ก๐ ๐๐ฎ๐ซ๐๐๐ง ๐จ๐ง ๐๐ข๐ญ๐ข๐ณ๐๐ง๐ฌ?
A6. Not at all. The reforms have already reduced multiple taxes and removed or suspended several charges that directly affect households and small businesses, such as VAT on fuel, excise tax on telecoms, and the cybersecurity levy. By harmonising earmarked taxes, government is reducing duplication and ensuring a more efficient tax system.
๐7. ๐๐ก๐ฒ ๐ง๐จ๐ญ ๐ฃ๐ฎ๐ฌ๐ญ ๐๐ฆ๐๐ง๐ ๐ญ๐ก๐ ๐ ๐๐๐๐ ๐๐๐ญ ๐ญ๐จ ๐ซ๐๐ฆ๐จ๐ฏ๐ ๐ญ๐ก๐ ๐ฌ๐ฎ๐ซ๐๐ก๐๐ซ๐ ๐?
A7. Yes, the surcharge has been removed from the FERMA Act and incorporated into the new tax laws which are designed to provide a forward-looking legal framework for Nigeria. Keeping this provision in place within a harmonised legal framework ensures Nigeria is prepared to address critical challenges, such as sustainable road financing and even climate change impacts. It is not about immediate implementation, but to ensure the law provides a clear and effective framework for when it becomes necessary in the future.
- ๐ท๐๐๐๐๐ ๐๐๐๐๐๐ ๐ญ๐๐๐๐๐ ๐ท๐๐๐๐๐ & ๐ป๐๐ ๐น๐๐๐๐๐๐ ๐ช๐๐๐๐๐๐๐๐
