The Federal Government has approved the implementation of the 2026 Fiscal Policy Measures, introducing sweeping tariff reductions across 127 items covering vehicles, food imports, steel and construction materials, industrial machinery, medical equipment, and electrical components in what represents the most comprehensive overhaul of Nigeria’s import duty regime since the 2015 fiscal policy.
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The new measures, contained in a circular dated April 1, 2026, and signed by Minister of Finance and Coordinating Minister of the Economy, Wale Edun, supersede the 2023 Fiscal Policy Measures and are designed to stimulate growth across critical sectors of the economy while supporting local industries and easing the cost of essential imports.
Among the most significant changes, import duties on fully built passenger vehicles have been slashed from 70 per cent to 40 per cent, bulk rice tariffs have been reduced from 70 per cent to 47.5 per cent, and agricultural and industrial machinery will now attract zero import duty down from five per cent.
A new excise duty regime and green tax surcharge will take effect from July 1, 2026, though electric vehicles, mass transit buses, and vehicles below 2000cc engine capacity are exempted.
Vehicles: 70% To 40%
The most headline-grabbing change is the reduction of import duties on fully built passenger vehicles, including four-wheel drives and station wagons, from 70 per cent to 40 per cent.
The 70 per cent rate, established under the 2015 fiscal policy as part of the government’s attempt to encourage local vehicle assembly, had been widely criticised as making car ownership prohibitively expensive for most Nigerians. The high tariff pushed vehicle prices well beyond the reach of middle-class Nigerians and failed to stimulate meaningful local vehicle production.
The reduction to 40 per cent, while still substantial, represents a significant easing that could lower the cost of imported vehicles and potentially expand the market for new cars.
Food Imports: Significant Reductions
The government introduced notable reductions on essential food imports, addressing cost-of-living concerns at a time when food inflation remains a major burden for Nigerian households.
Bulk rice imports rice in quantities exceeding 5 kilograms now attract a duty of 47.5 per cent, down from 70 per cent. Broken rice duties have been reduced even more dramatically to 30 per cent from 70 per cent.
Raw cane sugar tariffs were cut from 70 per cent to 55 per cent, while cane and beet sugar in powder or granule form was reduced from 70 per cent to 57.5 per cent. Refined salt imports saw a similar reduction to 55 per cent from 70 per cent.
Crude palm oil imports will attract an effective duty of 28.75 per cent, reduced from 35 per cent under the previous regime.
However, wheat or meslin flour tariffs remain unchanged at 70 per cent, reflecting the government’s continued policy of protecting the domestic wheat processing industry.
Zero Duty On Machinery And Equipment
In what the government described as a prioritisation of industrialisation, import duties on several categories of critical equipment were slashed to zero.
Agricultural and manufacturing machinery now attract zero per cent duty, down from five per cent. Cargo ships above 500 tonnes are now duty-free, as are railway locomotives under Semi-Knocked-Down and Completely-Knocked-Down arrangements.
Medical and safety equipment also benefited, with breathing appliances and gas masks now duty-free, while modular surgical operating theatres saw tariffs reduced from 20 per cent to five per cent.
These zero-duty provisions are designed to lower the cost of equipping farms, factories, hospitals, and transport systems — sectors where imported equipment remains essential due to limited domestic manufacturing capacity.
Steel And Construction Materials
The construction sector received significant relief through reduced duties on steel products and ceramic materials.
Zinc-coated steel sheets, aluminium-coated steel coils, and electroplated steel all saw duties reduced from 45 per cent to 35 per cent. Hot-rolled deformed steel bars and steel rods (5.5mm to 14mm) were similarly reduced from 45 per cent to 35 per cent. Cold-rolled steel with less than 0.25 per cent carbon content was set at 15 per cent.
Unglazed ceramic tiles were reduced from 40 per cent to 35 per cent, glazed ceramic tiles from 55 per cent to 46.25 per cent, and ceramic cubes below 7 centimetres from 40 per cent to 35 per cent.
These reductions are expected to lower building costs at a time when Nigeria is grappling with a housing crisis estimated at a deficit of 14.9 million units, with construction material costs cited as a major driver of rising rents across the country.
Electrical And Industrial Components
Tariffs on electrical and industrial components were also reduced to lower production costs and enhance competitiveness.
Electrical apparatus such as fuses were cut from 20 per cent to 10 per cent. Automatic circuit breakers and lamp holders were similarly reduced from 20 per cent to 10 per cent. Air and vacuum pumps and compressors were reduced from 10 per cent to five per cent.
Other Reductions
Additional items on the revised list include antimalarial medicaments at 20 per cent, margarine (excluding liquid) at 40 per cent, envelopes reduced from 50 per cent to 40 per cent, and diaries and notebooks reduced from 40 per cent to 30 per cent.
Green Tax And Excise Duty
The 2026 FPM introduces a new excise duty regime alongside a green tax surcharge, both scheduled to take effect from July 1, 2026. The green tax surcharge is designed to discourage the importation of environmentally harmful vehicles and encourage the adoption of cleaner transportation.
However, several categories of vehicles have been exempted from the green tax surcharge, signalling the government’s policy priorities. These exemptions include vehicles below 2000cc engine capacity, mass transit buses, electric vehicles, and locally manufactured vehicles and automotive components under specified tariff headings.
The exemption for electric vehicles represents a significant policy signal, suggesting the government is positioning Nigeria to benefit from the global shift toward electric transportation while protecting affordable vehicle categories and mass transit options.
90-Day Grace Period
To ease the transition to the new tariff regime, the government granted a 90-day grace period for importers who opened Form ‘M’ — the mandatory import documentation — before April 1, 2026. These importers will be allowed to clear their goods using the old tariff rates, preventing sudden disruption to transactions already in progress.
Summary Of Key Changes
| Item | Old Rate | New Rate |
|---|---|---|
| Passenger vehicles | 70% | 40% |
| Bulk rice (>5kg) | 70% | 47.5% |
| Broken rice | 70% | 30% |
| Raw cane sugar | 70% | 55% |
| Cane/beet sugar | 70% | 57.5% |
| Refined salt | 70% | 55% |
| Crude palm oil | 35% | 28.75% |
| Zinc-coated steel | 45% | 35% |
| Ceramic tiles (glazed) | 55% | 46.25% |
| Agricultural machinery | 5% | 0% |
| Cargo ships (>500t) | 5% | 0% |
| Railway locomotives | 5% | 0% |
| Breathing equipment | 5% | 0% |
| Surgical theatres | 20% | 5% |
| Circuit breakers | 20% | 10% |
Economic Impact
The sweeping tariff reductions are expected to have multiple economic effects.
For consumers, lower duties on vehicles, rice, sugar, salt, and palm oil should translate into reduced prices for these essential items though the extent of the price reduction will depend on whether importers and retailers pass the savings on to consumers or absorb them as increased margins.
For manufacturers and industrialists, zero duties on machinery, reduced duties on steel and industrial inputs, and lower tariffs on electrical components should reduce production costs and improve competitiveness potentially encouraging new investment in manufacturing and construction.
For government revenue, the tariff reductions will reduce customs duty collections in the short term. However, the government appears to be betting that lower tariffs will increase import volumes, broaden the tax base, and stimulate economic activity that generates revenue through other channels — including the new excise duty regime and green tax surcharge taking effect in July.
The 2026 Fiscal Policy Measures are part of the government’s broader economic reform agenda, which has included the removal of fuel subsidies, the unification of exchange rates, and various monetary policy adjustments since President Tinubu took office in May 2023.
The tariff reductions represent a shift toward a more open trade policy, moving away from the protectionist approach that characterised previous fiscal policies — particularly the 70 per cent vehicle tariff established in 2015 and the high food import duties that were designed to encourage local production but often resulted in higher consumer prices without achieving self-sufficiency.
The government said the overall reforms are part of efforts to balance revenue generation with economic stimulation, while supporting local industries and easing the cost of critical imports a balancing act that will be tested in the coming months as the new rates take effect and their impact on prices, trade volumes, and government revenue becomes measurable.
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