The Lagos Chamber of Commerce and Industry (LCCI) has commended the Federal Government’s decision to suspend the VAT on diesel temporarily.
According to the statement signed by the Director-General of LCCI, Dr Chinyere Almona, FCA, “We were particularly concerned about the additional cost of 7.5% diesel tax on business operations and its transmission to final consumers.”
The suspension of VAT temporarily on diesel in response to the current economic challenges is laudable. This is comparable to recent VAT rate adjustments across European countries where lower VAT rates on gas, electricity and basic supplies were implemented by EU-member states in response to economic challenges. For example, in Germany, to ease the burden of inflation, the VAT rate was reduced on natural gas from 19% to 7% until March 2024.
Also, Belgium cut down energy costs permanently by 6%, while the Netherlands reduced VAT on natural gas, electricity, and district heating from 21% to 9%. In Ireland, VAT on gas and electricity is reduced to 9% for six months.
While the Chamber supports the temporary VAT holdup, it is, however, deeply worried about the high operating costs businesses and households face due to high inflation, high interest rates, and weakening local tender.
Policy remedies like this are important to jump-start/ revive the economy, particularly the MSMEs, services, and manufacturing sectors.
The Chamber suggests that to relieve businesses and consumers during this period of debilitating inflation, the government should extend reductions in VAT rates to other energy, fuel, and gas prices as well as staple food items.

THE LAGOS CHAMBER OF COMMERCE AND INDUSTRY
LCCI STATEMENT ON SUSPENSION OF VALUE ADDED TAX (VAT) ON DIESEL
The Lagos Chamber of Commerce and Industry (LCCI) wishes to commend the Federal Government’s decision to suspend the VAT on diesel temporarily. We were particularly concerned about the additional cost of 7.5% diesel tax on business operations and its transmission to final consumers.
The suspension of VAT temporarily on diesel in response to the current economic challenges is laudable. This is comparable to recent VAT rate adjustments across European countries where lower VAT rates on gas, electricity and basic supplies were implemented by EU-member states in response to economic challenges. For example, in Germany, to ease the burden of inflation, the VAT rate was reduced on natural gas from 19% to 7% until March 2024. Also, Belgium cut down energy costs permanently by 6%, while the Netherlands reduced VAT on natural gas, electricity, and district heating from 21% to 9%. In Ireland, VAT on gas and electricity is reduced to 9% for six months.
While the Chamber supports the temporary VAT holdup, it is, however, deeply worried about the high operating costs businesses and households face due to high inflation, high interest rates, and weakening local tender. Policy remedies like this are important to jump-start/ revive the economy, particularly the MSMEs, services, and manufacturing sectors.
The Chamber suggests that to relieve businesses and consumers during this period of debilitating inflation, the government should extend reductions in VAT rates to other energy, fuel, and gas prices as well as staple food items.
DR CHINYERE ALMONA, FCA
DIRECTOR GENERAL
LAGOS CHAMBER OF COMMERCE & INDUSTRY
04 OCTOBER 2023
