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On April 1, 2026, Nigeria’s Finance Minister Wale Edun signed a circular to introduce a green tax surcharge on vehicles as part of the 2026 fiscal policy measures. Implemented from July 1, this new tax will be imposed on 2,000 cc and above engine capacity vehicles. Vehicles of 2,000 cc to 3,999 cc and 4,000 cc and above engine capacity will be additionally taxed at 2 per cent and 4 per cent respectively. However, small vehicles with engine size below 2,000 cc are exempted along with mass transit buses, electric vehicles (EVs) and locally manufactured vehicles.
Import tariffs on fully built passenger vehicles have also been reduced from 70 per cent to 40 per cent. Nigeria has implemented the reduction as a ‘Supplementary Protection Measure’ within the ECOWAS common external tariff (CET) structure with addition of ‘Import Adjustment Taxes’ or levies on top of the base 20 per cent to reach 40 per cent of the current effective tariff. A 90-day grace period is granted to importers, manufactures and service providers for transition. These 2026 fiscal measures approved by the President of Nigeria replace the 2023 fiscal policy framework along with revised import tariffs and adoption of the ECOWAS CET and green tax. Since January 1, Nigeria has also imposed a 5 per cent fuel surcharge on petrol and diesel. While reduction in import tariff will ease import, green tax will enable import of small and fuel-efficient vehicles while restricting and penalising fuel guzzlers like SUVs, luxury vehicles and large trucks with high taxes.
The government’s message is clear: disincentivising import of high-emission polluting second-hand vehicles with shift towards small and fuel-efficient vehicles, clean and sustainable transport modes like bus transport, EVs and promoting local production. In addition to environmental gains, these measures will also support climate policy, energy transition agenda, economic reforms and revenue generation.
Nigeria imports a large number of vehicles every year of which 90 per cent are second-hand vehicles, known as ‘Tokunbos.’ According to the National Bureau of Statistics, Nigeria’s passenger car imports increased to Naira 1.58 trillion (equivalent to estimated US$ 11 trillion in 2025).
Nigeria has committed to achieve net zero emissions by 2060. “With clearly defined mid-century pathways, Nigeria now commits to reducing greenhouse gas emissions by 29 per cent by 2030 and 32 per cent by 2035 compared to 2018 levels, moving decisively toward achieving net-zero emissions by 2060. These targets are underpinned by expanded sectoral coverage, strengthened climate governance, and robust implementation frameworks that ensure both environmental integrity and socioeconomic advancement,” wrote President Bola Ahmed Tinubu in his foreword in the country’s Third Nationally Determined Contribution (NDC 3.0). Transport sector has a significant mitigation potential of 44.3 Mt CO2e from clean vehicles adoption as stated in the NDC 3.0.
Nigeria has taken several initiatives. The country has succeeded in controlling dieselisation by pricing diesel fuel higher than petrol. Its industrial policy promotes automotive industry and assembly. Fuel subsidy has been removed. The CNG programme for reduced transport and low fossil fuel import costs has been implemented. As has been the ‘no certification, no entry’ rule, which requires all imported vehicles to have prior certification before entering the country to improve road safety and curbing influx of sub-standard vehicles. It has also taken steps to ban import of polluting two-stroke engines. Green tax implementation will further add and result in more fuel-efficient vehicles and further shift towards electric vehicles with adequate infrastructure.