Nigeria is intensifying efforts to promote cleaner transportation and strengthen fiscal reforms through a new levy on imported vehicles with large engine capacities, as authorities aim to boost revenue while advancing the country’s energy transition agenda.
Approved by President Bola Tinubu, the policy introduces an additional charge ranging from 2% to 4% on imported vehicles with high engine displacement under the 2026 fiscal framework. The new measures are scheduled to come into effect on July 1.
An official notice indicates that vehicles with engine sizes between 2,000cc and 3,999cc will attract a 2% duty, while those with 4,000cc and above will be subject to a 4% surcharge. However, smaller engine vehicles under 2,000cc, public transport buses, electric vehicles, and locally assembled cars will not be taxed.
The initiative reflects Nigeria’s broader push to align economic restructuring with environmental objectives, as the country contends with increasing transport emissions and a heavy reliance on imported used vehicles.
It also signals a gradual transition toward greener mobility, with electric vehicles and domestic vehicle assembly positioned as key pillars of the shift.
Policy mix targets emissions cuts and industrial growth
The new import duty is part of a wider fiscal reform package that also reduces tariffs on fully built passenger vehicles from 70% to 40%, alongside changes to excise duties and full implementation of the ECOWAS Common External Tariff.
Finance Minister Wale Edun said the updated framework replaces the 2023 fiscal policy and will be officially published, with a 90-day adjustment period for importers and manufacturers.
Nigeria, one of Africa’s largest economies, continues to grapple with the challenge of balancing revenue mobilisation, inflation control, and environmental sustainability within its transport sector.
Government officials argue that the revised structure is intended to discourage high-emission vehicle imports while strengthening local production and reducing cost pressures on consumers.
Policy analysts describe the approach as a blended strategy, combining climate-focused taxation with broader trade liberalisation to stimulate activity in the automotive industry.
Exemptions for electric vehicles and locally assembled cars are consistent with Nigeria’s ambition to reduce dependence on fossil fuels and meet its climate obligations under the Paris Agreement.
For automobile manufacturers, the policy is expected to reshape import dynamics, particularly for luxury and high-engine-capacity vehicles, while opening opportunities for investors in local assembly plants and electric mobility solutions.