New Forex Policy Raises Import Duty By 43%

New forex policy raises import duty by 43%
Col. Hameed Ali, CG of Nigeria Customs Service

Following the commencement of the implementation of the new foreign exchange policy, which moves the naira to dollar exchange rate from 197 to a minimum of 280, customs duties on imported cargoes have risen by about 43 per cent.

Prior to the adjustment of the exchange rate, the duties on imported items had earlier been calculated on N197 to a dollar rate despite the high rate in the black market.

However, a circular that was recently issued to all zonal coordinators and Customs Area Controllers, directed that the relevant provisions in the Customs and Excise Management Act on the evaluation of duty for cargoes should be complied with.

The circular, signed by the Deputy Comptroller-General, Tariff and Trade, Nigeria Customs Service, A. Adewuyi, read, “In consonance with the provisions of CEMA on the evaluation and clearing of imported goods into the country, Mr. President has approved the use of the exchange rate at the time of making entry as provided in CEMA, Customs and Excise Notice No.13 on the value of imported goods.

“Where the value of an imported good is shown in foreign currency, such value is to be converted to the equivalent Nigerian currency as at the rate at the time of making entry. The current rates of exchange are published at the Customs House.”

It added that the Comptroller-General, of Nigeria Customs Service, Col. Ahmed Ali (retd.), had directed that all declarations in respect of imported goods whose values were shown in foreign currencies must comply with the provision.

The spokesperson for the Tin-Can Island Customs Command, Chris Osunkwo, confirmed the development, saying, “We observed last Friday that the current exchange rate of the naira to the dollar had been adjusted on our system. This development has nothing to do with the Customs because we are acting in accordance with our law.

“That import duties had for months been evaluated based on the N197 to a dollar rate doesn’t mean it is fixed. Since the value of the naira will now be determined by market forces, it means adjustments will be made regularly, depending on the current value of the naira.”

The National President of the Association of Nigeria Licensed Customs Agents, Olayiwola Shittu, said although the development was expected, he called on the NCS to be transparent with the process.

He said, “It is expected that the exchange rate will affect duty payment. It will be floating because the calculation cannot be static; it is dependent on the benchmark of the Central Bank of Nigeria. So, if we have more exports, we will earn more foreign exchange, the naira will appreciate and the exchange rate will drop.

“We are appealing to the Customs to have a holistic approach to the evaluation of duty. If they are going to use a benchmark of exchange for a certain period, then they should say so. We don’t want to be taken advantage of or have a situation where after paying duty for your cargo, at the point of release, someone asks you to go back and make another payment because another rate has been released for the new week.”

Shittu also appealed to the Customs to ensure that such directives and regulations emanating from its headquarters to the field officers were shared with customs agents and importers.

He said, “We need openness and transparency in the evaluation of import duties, especially when it comes to the benchmark for vehicles. Often, new directives are not shared with agents and they become victims of ignorance.

“This eventually leads to bargaining and corruption within the port system. It is easier to comply when we know what the regulation is. If everyone knows what the regulation is and still tries to short-change the system, then the person should face the music.”

An importer, Nicodemus Odolo, described the adjustment by the Customs as having a negative effect on the Nigerian economy.

He said, “I just got the information today. I believe this adjustment of the exchange rate on import duties will shut down Nigerian seaports. Importers will no longer be able to import cargoes because no businessman will want to engage in anything that will not yield profit. Already, everyone is groaning about the hardship and inflation in the country.

“As you know, imports into Nigeria have fallen by about 40 per cent. So, this will have a negative effect on the income accruable to the Federation Account; the government will have less money and this will affect the budget.”

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