FG begins Green Tax on imported vehicles: New import duty changes explained

The Federal Government has started collecting the Green Tax Surcharge on imported vehicles, a new environmental levy aimed at reducing carbon emissions while promoting cleaner transportation. The policy took effect on July 1 under the 2026 Fiscal Policy Measures and is being enforced by the Nigeria Customs Service (NCS) alongside a broader review of import tariffs and excise duties.

What is the Green Tax and who is affected?

The Green Tax is an environmental surcharge imposed on selected imported vehicles, especially those with larger engine capacities that emit higher levels of carbon dioxide. The levy targets higher-engine petrol and diesel vehicles, while electric vehicles, mass transit buses, and locally manufactured vehicles are exempt. The government says the policy is designed to discourage high-emission automobile imports and encourage cleaner alternatives.

The Nigeria Customs Service began collecting the surcharge during customs clearance on July 1. Ahead of the rollout, Customs organised nationwide sensitisation programmes for freight forwarders, licensed customs agents, importers and other stakeholders to explain the new measures and ensure compliance.

Key import duty changes under the new regime

The government also reduced import levies on new and used vehicles and reviewed tariffs on several essential commodities to cushion the impact of the Green Tax. Here are the major changes:

Brand-new passenger vehicles: Import levy reduced from 20 per cent to 10 per cent. Used vehicles: Import levy cut from 15 per cent to five per cent. Higher-engine petrol vehicles: Petrol vehicles above 2,000cc now attract a Green Tax surcharge of two to four per cent, depending on engine size. Large diesel vehicles: Selected diesel-powered vehicles with higher engine capacities are also covered by the surcharge. Electric vehicles: Exempt from the Green Tax. Mass transit buses: Exempt from both the Green Tax and some import duties. Agricultural and manufacturing machinery: Import duties removed completely. Rice: Import duty on bulk rice reduced from 70 per cent to 47.5 per cent. Crude palm oil: Tariff lowered from 35 per cent to 28.75 per cent. Raw sugar: Import duties reduced from 70 per cent to between 55 per cent and 57.5 per cent.

What stakeholders are saying

While the government expects the policy to support climate goals and generate additional revenue for environmental initiatives, stakeholders believe the surcharge could increase the landing cost of certain imported vehicles, particularly large Sport Utility Vehicles (SUVs) and luxury automobiles. These additional costs are likely to be passed on to buyers. However, reductions in import duties on passenger vehicles and several essential goods are expected to offset some of the cost pressure and help moderate inflation in selected sectors.

For the naira and Nigerian consumers, the combined effect of lower duties on essential goods and the new surcharge on high-emission vehicles will determine whether the policy ultimately eases price pressures or adds to the cost of imported vehicles. Importers and dealers are watching closely to see how the new regime plays out at the ports.