FG has cut import tariffs to 5% for used vehicles, 10% for new — Adeniyi

The Federal Government of Nigeria has implemented significant reductions in import tariffs for both new and used vehicles, effective as part of the 2026 Fiscal Policy Measures. Import duties on used vehicles have been slashed from 15% to 5%, while those on brand-new vehicles have been reduced from 20% to 10%. This policy shift, confirmed by the Comptroller-General of the Nigeria Customs Service, Adewale Adeniyi, aims to alleviate the cost of living, stimulate trade, and potentially curb cargo diversion to neighbouring ports. However, the introduction of a new 'Green Tax Surcharge' on vehicles with larger engine capacities, alongside persistent challenges like exchange rate volatility and other port charges, may temper the overall impact on vehicle prices and customs revenue.

The Nigerian automotive sector and consumers are poised for a significant shift following the Federal Government's recent announcement of reduced import tariffs on vehicles. Comptroller-General of the Nigeria Customs Service (NCS), Adewale Adeniyi, confirmed that import duties on used vehicles have been cut from 15% to 5%, and on brand-new vehicles from 20% to 10%. This development, part of the broader 2026 Fiscal Policy Measures, signals a concerted effort by the government to address the prevailing cost-of-living crisis and stimulate economic activity.

This policy adjustment is expected to have far-reaching implications for vehicle importers, dealers, and the general populace, potentially making vehicle ownership more accessible. However, the concurrent introduction of a 'Green Tax Surcharge' on certain engine capacities introduces a nuanced layer to the new tariff regime, suggesting a dual objective of economic relief and environmental consideration. Legal professionals and stakeholders in the import and logistics sectors must therefore critically assess these changes to navigate the evolving regulatory landscape effectively.

This article will delve into the specifics of these tariff reductions, examine the underlying legal and policy frameworks, analyse the potential impacts and any inherent contradictions, and conclude with practical implications for legal practitioners advising clients in the affected industries.

Nigeria's import tariff regime is primarily governed by the Economic Community of West African States (ECOWAS) Common External Tariff (CET), which the country adopted on January 1, 2015, in line with regional trade liberalisation objectives. Historically, the nation has employed a combination of duties and levies, often with high rates, to generate revenue and protect its nascent local automotive industry. For instance, prior to recent adjustments, the comprehensive import cost for vehicles could reach as high as 70%, comprising basic tariffs and additional taxes. In 2021, a tariff adjustment saw duties on imported vehicles reduced from 35% to 10%, though this primarily affected commercial vehicles.

The immediate precursor to the current changes is the Federal Government's 2026 Fiscal Policy Measures (FPM), which were officially issued by the Minister of Finance. These measures represent a significant overhaul of the nation's tariff regime, targeting numerous tariff lines with reduced rates across various sectors, including essential goods and transportation. The stated rationale behind these sweeping reductions is to combat the country's pervasive cost-of-living crisis, lower the cost of car ownership, and encourage legitimate imports by making Nigerian ports more competitive against neighbouring alternatives.

The core of the recent policy shift lies in the direct reduction of import duties: used vehicles (often referred to as 'Tokunbo') now attract a 5% duty, down from 15%, while brand-new vehicles see their duty rate halved from 20% to 10%. This move is distinct from the broader reduction in the overall comprehensive tax rate for passenger vehicles, which some reports indicate was slashed from 70% to 40% as part of the same fiscal policy measures. The implementation of these revised tariffs commenced in May 2026.

Crucially, these tariff cuts are accompanied by the introduction of a 'Green Tax Surcharge,' which took effect from July 1, 22026. This environmental levy targets imported vehicles with larger engine capacities: a 2% surcharge applies to vehicles with engines between 2,000cc and 3,999cc, while those with engines of 4,000cc and above incur a 4% levy. Significantly, mass transit buses, electric vehicles (EVs), and locally manufactured vehicles are explicitly exempted from this green charge, reflecting a policy intent to promote cleaner energy and local production.

While the duty reductions are substantial, industry stakeholders and legal experts caution that the actual impact on the final landed cost of vehicles for consumers may not be as dramatic as the headline figures suggest. Factors such as persistent exchange rate volatility, the multitude of other port charges (including the 1% Comprehensive Import Supervision Scheme (CISS) fee and the 0.5% ECOWAS Trade Liberalization Scheme (ETLS) levy), terminal handling fees, and delays in cargo clearance continue to significantly influence the ultimate price. The Comptroller-General of Customs himself acknowledged that while the lower tariffs are expected to encourage legitimate imports and improve trade, they could also negatively affect Customs revenue from vehicle imports.

From a legal standpoint, these changes are embedded within the 2026 Fiscal Policy Measures, which derive their authority from relevant finance acts and the overarching Customs and Excise Management Act (CEMA). The incorporation of these provisions into the ECOWAS unified tariff framework lends a degree of long-term certainty to their implementation. However, the interplay between the reduced import duties and the new Green Tax Surcharge creates a complex calculation for importers, requiring meticulous attention to vehicle specifications and classification to determine the precise financial implications.

The Federal Government's decision to reduce import tariffs on vehicles, as articulated in the 2026 Fiscal Policy Measures, represents a significant policy intervention aimed at easing economic pressures and fostering trade. Legal practitioners advising clients in the automotive import, logistics, and retail sectors must thoroughly understand the new duty rates of 5% for used vehicles and 10% for new vehicles, as well as the nuances introduced by the Green Tax Surcharge on larger engine capacities. The exemptions for mass transit buses, electric vehicles, and locally manufactured vehicles are also critical considerations for strategic planning.

Practitioners should advise clients to conduct comprehensive cost analyses that factor in not only the revised import duties and the new green tax but also the persistent challenges of foreign exchange fluctuations, port charges, and other administrative levies. While the policy aims to reduce the cost burden, the full extent of this relief will depend on how these various components interact. Moving forward, it will be crucial to monitor the practical implementation of these measures, their impact on market prices, and any further regulatory clarifications from the Nigeria Customs Service or the Ministry of Finance, as these will shape the operational and financial landscape for businesses in Nigeria's automotive value chain.