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

The federal government has approved the 2026 fiscal policy measures (FPM), introducing wide-ranging tariff adjustments across key sectors of the economy.

In a circular dated April 1, 2026, and signed by Wale Edun, minister of finance and coordinating minister of the economy, the government said the new measures replace the 2023 FPM.

The policy features a national list of 127 tariff lines with reduced import duty rates aimed at promoting growth in critical sectors.

Under the new framework, the import adjustment tax on crude palm oil is set at an effective rate of 28.75 percent, reduced from previous levels. Similarly, tariffs on fully built passenger vehicles, including four-wheel drives and station wagons, have been lowered to 40 percent from 70 percent in the 2015 policy.

The government also granted a 90-day grace period for importers who opened Form ‘M’ before April 1 to clear goods at the old rates.

However, a new excise duty regime and green tax surcharge will take effect from July 1, 2026.

Key tariff revisions include:

• Anti-malarial drugs: 20 percent
• Rice (bulk or above 5kg): 47.5 percent (down from 70 percent)
• Broken rice: 30 percent (down from 70 percent)
• Wheat or meslin flour: 70 percent
• Crude palm oil: 28.75 percent (down from 35 percent)
• Margarine: 40 percent
• Raw cane sugar (beet sugar): 57.5 percent (down from 70 percent)
• Raw cane sugar (other): 55 percent (down from 70 percent)
• Refined salt: 55 percent (down from 70 percent)
• Envelopes: 40 percent (down from 50 percent)
• Diaries and notebooks: 30 percent (down from 40 percent)
• Ceramic tiles (various categories): between 35 and 46.25 percent

For industrial materials, tariffs on several steel products, including zinc-coated sheets, aluminium-coated coils, and steel rods, have been reduced to 35 percent. Cold-rolled steel with low carbon content is now set at 15 percent.

Electrical components such as fuses now attract 10 percent duty, while tariffs on machinery and specialised equipment including agricultural and manufacturing machines, cargo ships, railway locomotives, and breathing apparatus have been reduced to zero.

Medical infrastructure items such as modular surgical operating theatres now attract 5 percent duty, down from 20 percent.

Items excluded from the green tax surcharge include vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles.

The measures are expected to stimulate economic activity while balancing revenue generation and environmental considerations.