The Federal Government of Nigeria (FGN) has approved and ordered the implementation of the 2021 Fiscal Policy Measures (2021 FPM), effective 6 September 2021. The 2021 FPM replaces the 2019 FPM which had been in force since 1 July 2019. Approval of the 2021 FPM was communicated by the Honorable Minister of Finance through a circular (“the Circular”) dated 31 August 2021.
A preliminary review of the 2021 FPM reveals FGN’s continued effort at encouraging investment in certain critical industries, stimulate local production, drive backward integration, and align fiscal policies with the recent changes made by Finance Act 2020.
Some key changes made by the 2021 FPM are highlighted below:
- Dairy products: The import tariff reduction previously enjoyed on milk and its derivatives have been rescinded. Similarly, the import tariff on margarine has been increased. These changes reinforce the FGN’s commitment to stimulate backward integration and encourage local production of dairy products.
- Tobacco and alcoholic beverages: Import tariff reduction has been granted on tobacco and its variations while spirits, sparkling wine, brandy, vodka, gin, and other alcoholic beverages have been taken off the import adjustment tax list. This move by the FGN seeks to align the FPM with the Finance Act 2020, which already imposes excise duty on the importation of these products.
- Health care products: While import tariff reduction has been granted on medical gloves, the import duty on undenatured ethyl alcohol used for medical, pharmaceutical, or scientific purposes has been increased. This is part of FGN’s strategy to reduce the cost of medical products and encourage local sourcing of input materials used in the health care sector.
- Railway transportation: Import duty on ferrous products and unwrought zinc used in railway and automobile sectors have been reduced. In addition, the import duty on railway or tramway locomotives, their fittings and parts have been reduced. These concessions reinforce FGN’s commitment to encouraging investment in the railway sector.
- Manufacturing: Specific machinery and equipment used in the manufacturing sector would now enjoy import duty waivers to encourage capital investments in the manufacturing sector. It would be recalled that import duty waivers were previously restricted to specific machinery and equipment purchased by players in the agriculture, cement, power, iron & steel, solid minerals and textile industries.
- Energy: Import duty on containers for compressed or liquified gas, iron or steel and barb wires used for fencing of iron or steel have been increased. This seeks to encourage local sourcing of input materials used in the energy sector, thus stimulating backward integration.
The Circular grants a ninety (90) days grace period, from the effective date of the 2021 FPM, for importers who have opened Form Ms and entered into irrevocable trade agreements to process and clear their goods at the prevailing import duty rates under the 2019 FPM. However, import transactions entered from 6 September 2021 would be subject to the new import duty regime.
See the official 2021-Fiscal-Policy-Measures-and-Tariff-Amendments below