Nigeria Introduces Green Tax on High-Engine Vehicles

The Federal Government of Nigeria has announced the introduction of a green tax that will impose a levy of 2% to 4% on high-engine vehicles, effective July 1, 2026. This measure is part of a broader fiscal policy initiative approved by President Bola Ahmed Tinubu, aimed at aligning Nigeria's tax framework with environmental objectives and enhancing revenue generation.

The government circular, which was reviewed by Reuters, indicates that the new levy will target vehicles based on engine capacity, while exempting specific categories to encourage cleaner alternatives. Additionally, a 90-day grace period will be granted to allow importers and manufacturers to adjust before the full implementation of the green tax.

This initiative is part of a wider strategy to reform Nigeria's fiscal policy, which includes revising import tariffs and excise duties, and aims to expand the tax base and reduce environmentally harmful consumption patterns.