The Federal Government of Nigeria has announced an exemption from import duties and Value Added Tax (VAT) on essential raw materials used in the manufacturing of pharmaceutical products, for two years. The announcement was made on Tuesday, March 25th by the Nigeria Customs Service (NCS).
The tax exemption covers essential inputs like Active Pharmaceutical Ingredients (APIs), excipients, and raw materials for making essential medicines, as well as Long-Lasting Insecticidal Nets (LLINs). Other items exempted from this tax include Rapid Diagnostic Kits (RDK), reagents, and packaging materials.
The Nigerian customs explained that the new directive by President Bola Tinubu’s is aimed at strengthening Nigeria’s healthcare industry, reducing healthcare costs, and boosting local manufacturing. The action is in line with the Nigerian government’s objective, which was unveiled last year, to enhance local pharmaceutical manufacturing to cover at least 70% of domestic demand by 2030.
Cancer Treatment Forms The Bulk of Pharmaceutical Costs
According to findings made by 9am News Nigeria, more than 70% of Nigerian medications are imported, indicating a significant reliance on foreign pharmaceuticals. Cancer treatments alone are expected to account for the greatest portion of Nigeria’s overall pharmaceutical costs, which is expected to reach $1.84 billion in sales by 2025. This new tax incentive may translate to lesser costs for the Nigerian people.
However, the Federal Ministry of Health and Social Welfare has confirmed that only approved pharmaceutical manufacturers can benefit from this exemption. “Only manufacturers who have a valid Tax Identification Number (TIN) will benefit from these fiscal incentives to ensure they fulfill their intended purpose,” the Customs statement stated.
The NCS said it would gather and release quarterly reports that include importer information, import quantities, and import values for all imports made under this exemption, to ensure transparency. The agency also promised to work closely with stakeholders like importers and regulatory agencies to ensure the success of the policy.
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