Government Shakes Up Auto Market: FG Slashes Customs Charges by 67%

The Federal Government has initiated a new tariff policy, effective July 1, 2026, which significantly reduces Customs charges on imported new and used vehicles. This move is part of the government's 2026 fiscal policy, designed to decrease the cost of vehicle importation and enhance affordability for buyers nationwide. The policy is also a component of a broader review of Nigeria’s import tariffs and Customs system, aimed at stimulating trade and bolstering economic activities.

Under the revised framework, the import levy on new vehicles has been halved from 20 percent to 10 percent. Similarly, the levy on used vehicles has seen a substantial reduction, dropping from 15 percent to five percent. The Nigeria Customs Service (NCS) officially announced the implementation of these changes on its website. The NCS statement clarified: “Beginning 1st July, 2026, the Nigeria Customs Service will implement the Green Tax Surcharge as part of the 2026 Fiscal Policy Measures to support environmental sustainability, while also reducing the import levy on new vehicles from 20% to 10% and that of used vehicles from 15% to 5% to ease the cost of vehicle importation.”

Prince Ajibola, President of the National Association of Motor Dealers and Chief Executive Officer of Mitchel Automobile Limited, lauded the reduction in import levies as a positive development. However, he expressed caution regarding the immediate impact on vehicle prices, noting that it is premature to determine the true effect until more details about the new green tax surcharge are revealed. Ajibola emphasized that while the cut in import levies is a beneficial initial step, its advantages could be negated if the green tax surcharge proves to be excessively high.

Ajibola further explained the potential scenarios: “If the levy on used vehicles has been reduced from 15 per cent to five per cent, that is a 10 per cent reduction, which is a good development. However, we need to know what the green tax surcharge will be before we can assess its overall impact.” He concluded, “If the surcharge is less than the reduction, then it is a plus and we can expect some improvement in vehicle prices. But if it is the same as or more than what has been removed, then there will be little or no difference.”