ERA Wants VAT on Renewable Energy Reduced to 2%
Environmental Rights Action/ Friends of the Earth, Nigeria (ERA/FoEN) has called on the federal government to reduce the tax burden on renewable energy products by reducing the Value Added Tax (VAT) from 5 per cent to 2 per cent.
It also called on the National Assembly to make laws for more relaxed fiscal policies for renewable energy products in Nigeria.
Its Executive Director, Godwin Ojo, made the call while addressing a press conference on Friday in Abuja, with the theme ‘Tax Reduction on Renewable Energy in Nigeria’
He noted that 60 per cent to 70 per cent of Nigeria’s 200 million population does not have access to electricity, adding that in diversifying energy sources that is sustainable, renewable energy is the best option.
He stressed that tax regimes might help African governments to rake in some revenue from import tariffs, but added that it was also contributing to the slow pace of revenue energy development and access for all.
Ojo noted that while the federal government had made some good initiatives through the sola panel production by the National Agency for Science and Engineering Technology, an agency of the Ministry of Science and Technology, the agency requires more capacity building for efficiency to produce optimally, saying that its solar panel are currently more expensive compared to imprinted ones.
He stated: “The diverse sources of tax are worrisome with 5 per cent Stamp Duty, 5 per cent on solar panels, 25 per cent on batteries and inverters and other sundry taxes which raises the tax burden to about 30 per cent on products.
“We strongly propose that lowering taxes on renewable energy products will go a long in the promotion of energy access for all. Therefore the proposed hike on VAT from 5 per cent to 7.5 per cent in Nigeria, if at all it will be implemented should not be extended to solar lighting equipment and clean cook-stoves.
“We strongly advocate for reduction of VAT to 2 per cent on renewable energy products; five years tax moratorium for new renewable energy products to improve energy access for all; five years tax holiday for pioneers status in indigenous renewable energy businesses in Nigeria,” Ojo added.
The environmental rights group also stressed the need to urgently decentralised energy and supply to allow governments, civil society groups, communities and the private sector to participate in the energy sector supply chain.