FG cuts tariffs on cars, palm oil and sugar in new fiscal policy measures

The federal government has approved the implementation of its 2026 fiscal policy measures, introducing wide-ranging tariff adjustments aimed at stimulating key sectors of the economy.

In a circular dated April 1, 2026, signed by Wale Edun, the government confirmed that the new framework replaces the 2023 fiscal policy measures. The document outlines a revised tariff structure covering 127 items, with reduced import duty rates designed to “promote and stimulate growth in critical sectors of the economy”.

Under the new regime, several major imports will see lower tariffs. The import adjustment tax on crude palm oil has been reduced to a total effective rate of 28.75 percent, while tariffs on fully built passenger vehicles, including four-wheel drives and station wagons, have dropped to 40 percent from the previous 70 percent set in 2015.

The policy also affects essential goods and industrial materials. Tariffs on rice in bulk or large packaging have been reduced to 47.5 percent, broken rice to 30 percent, and refined salt to 55 percent. Raw cane sugar and processed sugar products also saw reductions to between 55 and 57.5 percent. Industrial inputs such as steel products, ceramic tiles, and electrical components have similarly experienced cuts, with some categories now attracting rates as low as 10 to 35 percent.

In addition, certain sectors have been granted zero-duty status to encourage investment and production. These include agricultural and manufacturing machinery, cargo ships above 500 tonnes, railway locomotives, and specialised medical equipment like breathing apparatus. Other items such as modular surgical theatres and air compressors have also seen reduced rates.

To ease the transition, the government approved a 90-day grace period for importers who had opened Form ‘M’ before April 1, allowing them to clear goods under the previous tariff regime.

However, further fiscal changes are on the way. A new excise duty framework and a green tax surcharge are scheduled to take effect from July 1, 2026. The green tax will exclude certain categories, including vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured automotive components.

Overall, the government said the measures are part of a broader effort to create a more balanced, market-driven trade environment while supporting domestic production and protecting economic stability.