The Federal Government has provided clarity on the controversial 5 per cent fuel surcharge, included in the recently signed Nigerian Tax Administration Act 2025, reassuring the public that it is not a new tax and will not be automatically implemented in 2026.

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, addressed journalists in Abuja on Tuesday to dispel any misconceptions regarding the surcharge, which has been a subject of public concern.

Edun explained that the 5 per cent surcharge was not a new levy, but rather a provision first introduced in 2007 under the Federal Road Maintenance Agency Act.

The surcharge was initially intended as a user charge designed to finance road maintenance and development across Nigeria.

“The inclusion of the surcharge in the 2025 Nigeria Tax Administration Act does not mean an automatic introduction of a new tax. It doesn’t mean fresh taxation automatically.

“The 5 per cent surcharge has existed since 2007. Its inclusion in the new law is merely for harmonisation and transparency. There is no immediate plan to implement any surcharge, and as of today, no commencement order has been issued or is being prepared,” Edun said.

The surcharge, Edun clarified, was originally designed with the objective of financing the country’s road network.

Forty per cent of the proceeds were allocated to FERMA for the maintenance and upkeep of federal roads, while the remaining 60 per cent was allocated to the states, managed through state equivalents of FERMA or state road management agencies.

Edun noted that the original purpose of the surcharge was to ensure better-maintained roads, which are critical for mobility, economic growth, and public safety.

According to the minister, while the surcharge has been in existence for over 15 years, its restatement in the 2025 Tax Administration Act aims to clarify and streamline Nigeria’s tax laws, making them easier to understand and comply with.

He emphasised that the implementation of the surcharge would not happen automatically.

Before any such charge can take effect, a formal commencement order must be issued by the Minister of Finance, and it must be published in the government gazette.

He further emphasised that the tax reform efforts were not just about imposing new charges but about fostering an environment where businesses can thrive and contribute to the growth of the Nigerian economy.

The reforms aim to strengthen the relationship between the federal, state, and local governments, ensuring better coordination and improving tax compliance across all levels of government, the minister said.