The Federal Government has no immediate plan to implement the 5 per cent Petroleum Products Tax as contained in the Tax Administration Act, 2025.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, stated this at a press briefing in Abuja, yesterday.
The tax has generated wide-spread anger among Nigerians, with organised labour giving the government an ultimate to step it down or face an industrial action.
Meanwhile, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said the proposed fuel surcharge is intended to generate a dedicated fund for Nigeria’s deteriorating roads, not to add extra strain on households.
However, Edun described the surcharge as a long-standing provision introduced under the Federal Road Maintenance Agency (FERMA) Act 2007 and not a new tax measure created by the Tinubu administration.
His words, “It is important to make this distinction. The inclusion of the surcharge in the 2025 Nigeria Tax Administration Act does not mean an automatic introduction of new tax. It doesn’t mean fresh taxation automatically.
“There is a whole formal process involved, and as of today, no order has been issued, none is being prepared and there is no plan. There is no immediate plan to implement any surcharge.
“This government is fully aware of the economic pressures of the time and will not take decisions that will make things even more burdensome.
“Our priority is to strengthen tax governance, block revenue leakages, and improve efficiency rather than just levy new taxes, charges, and costs.”
The fuel tax was designed to finance road maintenance and meant to be shared between the federal government and states on a 40%/60% basis.
Mr. Edun allayed fears that the new tax laws which implementation has been scheduled to commence on January 1, 2026 would increase the suffering of Nigerians.
Increases in petroleum products prices usually trigger heightened inflation in the country which was the basis of the widespread criticism of the tax.
Commenting on the 5% fuel surcharge, Oyedele, said the proposed fuel surcharge is intended to generate a dedicated fund for Nigeria’s deteriorating roads, not to add extra strain on households.
He acknowledged public worries that recent tax reforms could worsen inflation but argued that improved road infrastructure is essential to lowering the cost of moving goods and people. He clarified this while speaking on Channels Television’s Morning Brief on Tuesday.
5% fuel surcharge is one of the taxes under the recently enacted Nigeria Tax Act, 2025, and is proposed to take effect in January 2026.
However, it has sparked anxiety about potential inflation. The Trade Union Congress has threatened to call a nationwide strike within two weeks if the Federal government fails to scrap the tax. “I know everybody is concerned about the impact on inflation, I’m concerned myself,” he admitted.
“But we also know that around the world, road infrastructure is very important. Nigeria has about 200,000 kilometres of road, and only about 60,000 are okay. This is the major reason why transporting anything in Nigeria, whether goods or people, is costly and unsafe.”
Oyedele linked the poor state of roads directly to inflation, noting a yawning gap between rural and urban food prices.
“If you look at the rural inflation of food and compare it with the inflation of food in urban centres, sometimes the difference is as high as 5%. In most countries, that gap would be under 1%. The majority of the issues are to do with the state of the road and the multiple taxes being collected whenever you move goods around.”
He dispelled the notion that the surcharge is unnecessary after the subsidy was removed, stating that the tax was “introduced in 2007, and it wasn’t implemented because government was subsidising fuel.”
While he said the removal of fuel subsidies has opened fiscal space, the Chairman argued that subsidy revenues alone are insufficient to close Nigeria’s infrastructure gap.
“Even with the removal of fuel subsidy… the huge gap we still have in terms of infrastructural development is not going to be addressed by those revenues alone,” he said.
Oyedele said the surcharge would be implemented with care to avoid stoking inflation or hurting vulnerable citizens.
“Some of the strategies for this surcharge could be to time it at a period when there is an appreciation in the value of the currency. The naira gained 1% yesterday alone; if the naira gains about 5% and you put in this tax, nobody will notice the changes in the pump price. Or if the price of crude oil in the international market drops by about 5%, you can also have it at that point,” he explained.
Oyedele stressed that the funds from the surcharge would be ring-fenced and dedicated to fixing Nigeria’s failing roads.
“Then we can all focus this money to ensure that it is dedicated to fixing roads that can make all our lives better and bring down the prices of items,” he said.
FG gazettes tax reform laws, implementation to begin January 2026
Meanwhile, the Federal Government has gazetted Nigeria’s new tax reform laws, with implementation set to begin on January 1, 2026.
Oyedele, announced this in a post on X on MonDAY, saying the laws are the Nigeria Tax Act, 2025 (NTA), the Nigeria Tax Administration Act, 2025 (NTAA), the Nigeria Revenue Service (Establishment) Act, 2025 (NRSEA), and the Joint Revenue Board (Establishment) Act, 2025 (JRBEA). “Nigeria’s tax reform laws have been published in the official gazette,” the post reads.
Outlining key provisions of the tax laws, Oyedele said the reforms introduce a zero per cent tax rate for small companies defined as businesses with annual turnover not exceeding N100 million and fixed assets below N250 million.
He added that the corporate tax rate for large companies will be reduced from 30 percent to 25 percent, with the commencement date to be set by the president on the advice of the National Economic Council (NEC).
Exemption threshold of N50 billion revenue for local firms and €750m equivalents for multinationals,” Oyedele said.
