LAGOS — The Federal Government of Nigeria has slashed the total effective tariff on imported passenger vehicles from 70% to 40%, marking a major shift in Nigeria’s trade policy aimed at easing the high cost of living and stimulating economic growth.
The reduction is a central feature of the 2026 Fiscal Policy Measures (FPM), signed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. The policy, which officially took effect in April, replaces the 2023 fiscal guidelines and reverses high-tariff regimes dating back to 2015.
Under the new framework, the combined burden of import duties and levies on fully built passenger motor vehicles, four-wheel drives, and station wagons has been reduced by 30 percentage points. Previously, importers faced a cumulative 70% charge, comprising 35% duty and 35% levy, which has now been consolidated into a 40% effective rate.
Beyond standard vehicles, the government has introduced zero import duties for electric vehicles (EVs) and mass transit buses, as well as for agricultural and manufacturing machinery, to lower production costs for local industries.
The 2026 FPM includes a “National List” of 127 items with reduced duties to protect essential sectors. Notable adjustments include bulk rice tariffs dropping from 70% to 47.5%, while broken rice fell to 30%.
Essential food items like crude palm oil were cut to 28.75%, and raw cane sugar now ranges between 55% and 57.5%. These measures are intended to provide immediate relief to consumers by lowering the cost of imported staples and industrial inputs.
To ensure a smooth transition, the Ministry of Finance has granted a 90-day grace period for importers who opened “Form M” before April 1, allowing them to clear goods under the old rates if advantageous.
However, the government is also pivoting toward environmental sustainability. A new Green Tax surcharge and revised excise duty regime are scheduled to commence on July 1, 2026. While this tax aims to discourage the use of older, high-emission engines, vehicles under 2000cc and EVs are currently exempted from the surcharge to encourage cleaner transportation.
Government officials state these measures are designed to promote and stimulate growth in critical sectors while buffering the economy against global volatility. While vehicle dealers have welcomed the move, many note that the final market price for cars will remain sensitive to the volatility of the Naira and port clearing costs. The policy reflects a broader strategy to balance revenue generation with the need to alleviate inflationary pressures on Nigerian households.
| Item | Old Rate | New Rate |
| Passenger Vehicles | 70% | 40% |
| Bulk Rice (>5kg) | 70% | 47.5% |
| Broken Rice | 70% | 30% |
| Agricultural Machinery | 5% | 0% |
| Crude Palm Oil | 35% | 28.75% |
| Steel Sheets/Coils | 45% | 35% |
