ABUJA, April 17 – Nigeria has introduced a green tax on vehicles with larger engine capacities, according to a government circular outlining fiscal policy measures for 2026.
The levy applies at a rate of 2% on vehicles with engine sizes between 2,000cc and 3,999cc, and 4% on those with engines of 4,000cc and above with the surcharge in addition to existing import duties and forms part of a broader set of tax adjustments.
The policy took effect from April 1, with a 90-day grace period granted for importers, manufacturers and other stakeholders to comply. A separate excise duty on vehicles is scheduled to begin from July 1.
Vehicles with engines below 2,000cc are exempt from the levy, along with electric vehicles, mass transit buses and locally manufactured vehicles, according to the circular.
The measure is part of Nigeria’s 2026 fiscal policy framework, which also includes revised import tariffs, excise duty changes and the adoption of the ECOWAS common external tariff.
Officials said the policy is designed to incorporate environmental considerations into the tax system while expanding revenue sources.
Transport accounts for about 15% of Nigeria’s greenhouse gas emissions, based on government data. The country’s energy transition plan projects a significant reduction in transport-related emissions through increased adoption of electric vehicles.
The introduction of the green tax follows earlier fiscal measures, including tax reform laws signed in 2025 and new presumptive tax rules introduced in 2026 targeting small businesses.
