Fossil Fuel Surcharge in Nigeria: the 5% Fuel Tax, Start Date and Exemptions
A plain guide to the 5% fossil fuel surcharge: the rate, the base, the start rule and the products that are exempt.
Based on the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025, in force from 1 January 2026.
In 30 seconds
The Nigeria Tax Act imposes a 5% surcharge, often called the 5% fuel tax or petrol tax, on chargeable fossil fuel products provided or produced in Nigeria (section 158). It is worked out on the retail price (section 159).
It does not start by itself. The Minister must publish a commencement order in the Official Gazette (section 160(1)). The latest reports we found said no order had been issued.
What the surcharge is
Chapter Seven of the Act creates a surcharge on fossil fuel. It is a separate charge. It is not VAT and it is not income tax.
The Finance Minister said in September 2025 that it restates a charge from the Federal Roads Maintenance Agency Act of 2007. The new Act puts it into the tax code.
The rate and the base
- Rate: 5% (section 158).
- Base: the retail price of the chargeable fossil fuel product (section 159(2)).
- When it arises: on the supply, the sale or the payment, whichever happens first (section 159(1)).
| Example | Amount |
|---|---|
| Retail price of one litre | N1,000 |
| Surcharge at 5% | N50 |
Is the 5% fuel surcharge in force?
Not automatically. Section 160(1) lets the Minister indicate the start date by an order in the Official Gazette. Officials said in 2025 that the surcharge would not begin when the Act took effect in January 2026.
The latest reports we found, from April 2026, said no order had been published. Check the Gazette and the NRS website for the current position.
Who collects it
The Nigeria Revenue Service administers and collects the surcharge every month. It may issue regulations for this (section 160(2)).
Which products are covered
The Act does not list the chargeable products. It uses the term fossil fuel products. Officials and press reports describe petrol, diesel and aviation fuel as the main ones.
What is exempt
Section 161 exempts four groups of products.
- Clean or renewable energy products.
- Household kerosene.
- Cooking gas.
- Compressed natural gas (CNG).
The Act defines clean or renewable energy as energy from solar, wind, hydropower, geothermal or plant and animal waste. It must be naturally replenishing, produce little or no pollution or greenhouse gas, and not deplete over time.
The surcharge and VAT on fuel
VAT on petroleum products has its own delay. The Eleventh Schedule says charging and collection of VAT on petroleum products, CNG and LPG starts on a date the Minister sets by order (section 185(2)). See the VAT guide.
Common mistakes
- Assuming the surcharge has been charged since January 2026. It needs an order first.
- Charging it on exempt products such as cooking gas or CNG.
- Confusing it with VAT on fuel, which has a separate start rule.
Frequently asked questions
What is the fossil fuel surcharge in Nigeria?
A 5% charge on chargeable fossil fuel products provided or produced in Nigeria, worked out on the retail price (section 158, section 159).
Has the 5% fuel surcharge started?
Not as far as the latest reports we found show. It starts only when the Minister publishes a commencement order in the Official Gazette (section 160(1)).
Which fuels are exempt from the surcharge?
Clean or renewable energy products, household kerosene, cooking gas and compressed natural gas (section 161).
Who collects the surcharge?
The Nigeria Revenue Service administers and collects it monthly (section 160(2)).
How is the surcharge calculated?
5% of the retail price of the product. If a litre sells for N1,000, the surcharge is N50 (section 159(2)).
Is the surcharge the same as VAT on fuel?
No. The surcharge is in Chapter Seven. VAT on petroleum products is in Chapter Six and has its own start rule in the Eleventh Schedule.
Is the 5% petrol tax in force?
Not as far as the latest reports we found show. The surcharge in Chapter Seven needs a commencement order from the Minister in the Official Gazette (section 160(1)).
Related guides
Study this in the ICAN notes
These free ICAN exam notes cover the same topic, with worked examples and past-question practice.
- Current tax issues
- Nigeria Tax Act 2025: overview of the new tax laws
- Which law applies: periods before 2026 and the Nigeria Tax Act 2025
The sections, word for word
These are the sections this guide relies on, as published in the Official Gazette. Open any one to read it.
Section 158 Imposition of surcharge
Section 159 Chargeable transaction and base for surcharge
Section 160 Administration of the surcharge
Section 161 Exemption from surcharge
Status of the surcharge is as reported up to April 2026; confirm in the Official Gazette. Source for the Act: Nigeria Tax Act, 2025 (Act No. 7 of 2025), Official Gazette No. 117, Lagos, 26 June 2025. General information, not tax or legal advice.