When the management of the Nigeria Customs Service, in April 2022, came up with the introduction of an additional 15 per cent cost on the already high cost of clearing imported vehicles under the guise of the National Automotive Council levy, they failed to envisage that the policy would bring about upheavals and controversies.
Though the Service said that the directive was from the Federal Ministry of Finance and that it was only implementing it, the directive could best be described as a victim of circumstances coming at the time when the clearing agents operating at the nation’s ports were already tense with the introduction of the Vehicles Identification Number for the valuation of imported vehicles.
The VIN valuation on imported used vehicles, an artificial intelligence manual that drives documentation processes in an electronically digitised format, was a child of necessity. The services said it addressed the discrepancies in duties payable on vehicles of the same maker, year, and model.
While the VIN was still generating controversy, which led to the eventual suspension of the platform for 30 days, the NCS early last month reviewed duty on imported used cars from 35% to 20 %, which complied with the directive from the Common External Tariff of Economic Community of West African States.
The Service, not being satisfied with the ECOWAS directive on duties, went further to introduce the 15% NAC levy, which enabled the Service to regain the 15% from the former import duty on imported used vehicles taking the duty payable on imported vehicles back to 35% that it was before the directive from ECOWAS.
Imported used vehicles will still have to pay 20% import duty plus 15% NAC levy, amounting to 35%.
A spokesperson for the NCS, Timi Bomodi, had in a statement said that the new tariff was in line with adjustments stipulated in the Common External Tariff of the Economic Community of West African States protocol, of which Nigeria is a signatory.
The statement read, “On Friday, April 1st, 2022, the Nigeria Customs Service migrated from the ECOWAS Common External Tariff, 2017- 2021 to the new version, 2022- 2026. This is in line with the World Customs Organisation’s five-year review of the nomenclature. The contracting parties are expected to adopt the review based on regional considerations and national economic policy.”
“The nation has adopted all tariff lines with few adjustments in the extant CET. As allowed for in Annex II of the 2022-2026 CET edition, and in line with the Finance Act and the National Automotive Policy, NCS has retained a duty rate of 20% for used vehicles as was transmitted by ECOWAS with a NAC levy of 15%. New vehicles will also pay a duty of 20% with a NAC levy of 20%, as directed in the Federal Ministry of Finance letter Ref. No. HMF BNP/NCS/CET/4/2022 of April 7th, 2022.”
“It is instructive to note that domestic fiscal policy on the importation of motor vehicles and other items is targeted at growing the local economy in these sectors. The focus of the NCS is on implementing these policies in the hope that it achieves its desired objectives in line with National Automotive Policy and other fiscal policies of the government.”
“In Chapter 98 of the current CET Bonafide Assemblers importing Completely Knocked Down CKD and Semi Knocked Down SKD is to enjoy a concession of 0% and 10% Duty rate respectively. While within ECOWAS, the duty rate for the same items is 5% and 10%, respectively. Incentivising their efforts through policy interventions guarantees a win-win situation for the nation in the long run. Implementing the current CET takes immediate effect, please.”
