The Nigerian government has announced that it has finalized the process to implement an executive order abolishing value added tax (VAT) and excise taxes on medicines and medical devices.
This was announced in a statement posted on X on Wednesday and signed by Alaba Balogun, Director of Information and Public Relations at the Federal Ministry of Health and Human Services.
The development comes four months after President Bola Tinubu signed an executive order aimed at promoting local production of healthcare products and reducing costs.
Coordinating Minister of Health and Social Welfare Mohammad Pethe, who made the announcement on X-Handle, explained that the new order will reduce customs duties, excise taxes and value-added taxes on certain machinery, equipment and raw materials to zero.
According to the Minister, this order is critical to the success of the initiative approved by the President in October 2023 to unlock the healthcare value chain.
Eligible healthcare products include pharmaceuticals, diagnostics, devices such as needles and syringes, biologics, and medical textiles.
Issues to be addressed
Nigeria’s pharmaceutical industry is facing significant challenges, especially with the rise in drug prices across the country.
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The problem is blamed on the country’s overdependence on imports, which has been exacerbated by the withdrawal of multinational pharmaceutical companies such as GlaxoSmithKline (GSK) and Sanofi.
The country is overly dependent on imported medicines, hampering local manufacturing and increasing costs.
However, with this new order, the government seeks to address these issues and encourage local production and job creation.
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“The implications of this order are to promote the industrialization of healthcare, reduce the cost of medical products through long-term import substitution, create and sustain economic value, and enable markets to create jobs in the healthcare value chain. We’re focused on base incentives,” Pate said.
He added that the order also provides for the establishment of market-building mechanisms such as framework contracts and quantity guarantees to encourage local manufacturers.
Next step, implementation
The completed implementation of this order is expected to reduce the prices of essential medicines and medical supplies.
“This development is in line with the Ministry of Health’s unwavering commitment to alleviate both the physical and economic suffering faced by the millions of Nigerians who depend on these critical medical supplies,” the statement said. said.
According to the statement, the final decision on the Harmonized Implementation Framework for the Executive Order will be published in the Official Gazette.
He added that the ministry would distribute gazette copies of the framework to relevant agencies such as the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service for immediate implementation.
“By creating an environment that supports local manufacturers, we foster a healthier and more self-reliant nation and ensure that quality health care is more accessible and affordable for all. ” the statement further said.
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