Shippers
Guide is the learning page of MMS Plus. Here we answer the five W’s and H of several issues in the shipping industry. This week we bring you the Nigerian trade policies on imports and exports.
IMPORTS
The Federal Government has replaced the current preshipment inspection scheme with a destination scheme, and has moved from the Brussels definition of value to a system based on WTO Agreement. A value added tax of 5% applies to both domestically produced and imported goods; and excise duties, ranging from 20% to 40%, are applied on certain imports. Additional layers of duty are payable for purposes such as port development and import supervision. Government has also increased the number of goods on the import prohibition list. Nigeria has not imposed any trade defense measure; however, the authorities have indicated the need to protect local industries from dumping and unfair competition within the WTO framework.
MEASURES DIRECTLY AFFECTING IMPORTS
(i) CUSTOMS PROCEDURES AND VALUATION
The importation of goods to Nigeria is governed by the Customs and Excise Management Act; Customs and Excise Notices; and guide lines set out by the Federal Ministry of Finance. Under these provisions, importers do not need to be registered, since registration with the Corporate Affairs Commission under the Companies and Allied Decree of 1999 is sufficient to import all but a few regulated goods. Importers must complete an import declaration form: Form M, other required documents include: an attested invoice, bill of entry, copy of bill of lading/airway bill, a packing list, certificate of insurance, a bank receipt for import duties, a clean report of inspection issued by the preshipment inspection agent. The Government has stepped up efforts to bring efficiency to the customs administration. Reforms to customs services are one of the core components of the Government’s current reform programme. The objective of the programme is to modernize and speed up customs clearance; simplify and rationalize tariffs, duties, and waiver; improve revenue collection by customs; and strengthen and professionalized customs services. The measures taken (or planned) include: a downward shift in port taxes and levies, and elimination of some redundant port security agencies; the establishment of a unit to fight corruption in the provision of customs services; and administrative changes to the management and operation of NCS. It is reported that the efforts to modernize and professionalize the Nigerian Customs Service and the Nigerian Port Authority have helped to reduced port congestion and clearance rates, particularly at Lagos Apapa port, which handles over 40% of Nigeria’s trade.
(ii) RULES OF ORIGIN: Nigeria’s non-preferential rules of origin are contained in Customs Duties Art. Nigeria also applies the ECOWAS rules of origin under which a finished product has community origin.
(iii) CUSTOM TARIFFS: Within the context of accelerated integration amongst ECOWAS member states, Nigeria is committed to adjusting its tariffs to the ECOWAS common external tariff, ranging from zero to 20% with a four band tariff structure, by 2007. In general, Nigeria has lagged behind in trade reforms and hence has higher average and dispersed tariffs. Alignment with the ECOWAS CET should bring about liberalization and rationalization of Nigeria’s current tariff regime and help simplify customs administration.
(iv) DUTY EXEMPTIONS AND CONCESSIONS: The general import guidelines provide for exemptions from duties on a number of goods, including: aircraft, their part and ancillary equipment; life saving appliances; all goods imported for the official use of a Consular Officer, where the Government of the country represented grants similar privileges; furniture and personal effect of diplomats; goods obtained free as technical assistance materials form donor international organizations or countries; personal and household effects in passengers’ baggage; and military hardware and uniforms. Various tariff concessions are also in place to attract investment. Duty concessions are granted on certain raw materials used by manufacturers in the communications, telecommunications, glass, baby napkin, motor cycle and bicycle industries, by virtue of their status as “Bonafide” manufacturers. Various special duty concessions have also been granted to the British America Tobacco Company to enable it set up a tobacco plant in Nigeria. Tariff concessions also apply on fertilizers, in support of the agricultural sector.
(v) PREFERENTIAL TARIFFS: As a member of ECOWAS, Nigeria provides tariff preferences to other ECOWAS member states
(vi) OTHER DUTIES AND TAXES: Nigeria bound other duties and charges on all imports at 80%. Additional duties applying only to imports include: a port development levy of 7% of the duties payable; an ECOWAS community levy of 0.5%; a Comprehensive Import Supervision Scheme charge of 1% on the f.o.b. value of imports, a national automotive council levy of 2% on vehicles and parts; and a levy of 10% on the importation of both sugar and rice.
(vii) EXCISE DUTY: Excise duties, which had been abolished at the time of the last TPR of Nigeria, were reintroduced in 1999 on, inter alia, spirits, cigarettes, alcoholic beverages, and cosmetics, at rates ranging from 20% to 40%. Excise duties apply to the duty-inclusive price of imports, and to the sales price of locally produced goods.
(viii) ANTI-DUMPING AND COUNTERVAILING MEASURES: The Customs Duties (Dumped and Subsidies Goods) Act 1958 provides for the imposition of a special duty on any goods deemed to be dumped by companies or subsidized by any Government or authority outside Nigeria. Under the Act, goods are regarded as having been dumped if the export price is lower than the “fair market price”.
(ix) IMPORT PROHIBITIONS, QUANTITATIVE RESTRICTIONS, AND LICENSING: Under Nigeria’s Customs Legislation, import prohibition can be applied to protect domestic industries; to reduce balance – of – payments deficits; as anti- dumping measures; and for moral, safety and other processes. The Government modifies the import prohibition list, adding or subtracting items, through notices and decrees. (For a comprehensive list of items on the prohibition list, please click here EXPORTS (i) REGISTRATION AND DOCUMENTATIONExporters are required to be registered with the Nigerian Export Promotion Council (NEPC). The y must submit a completed application form along with copies of a certificate of incorporation, tax clearance certificate form C.O.7 and the memorandum of articles of association. Exporters must renew their registration every two years, submitting evidence of export performance and a current company tax clearance. All exporters must complete and register an export proceeds (NXP form with an authorized dealer) of their choice. Other export documents include a proforma invoice, a sales contract, if applicable, NEPC registration certificate, relevant sanitary and phytosanitary certificates, shipping documents and other forms required by the importing country.
(ii) EXPORT TAXES, CHARGES AND LEVIESThe export amendment decree of 1992 prescribes that all new material or unprocessed commodities, whether mineral or agriculture, may be subjected to the payment of an export level as may be prescribed from time to time, by order of the NEPC.
iii)EXPORT PROHIBITION AND CONTROLSUnder Nigeria’s Export Prohibition Act, certain exports are prohibited for purposes of domestic food security, value-added considerations, and preservation of cultural heritage. Currently, the ban covers raw hides and skins, timber (rough or sawn), scrap metals, unprocessed rubber latex and rubber lumps, rice, yams, maize, beans and artifacts and antiquities. (iv) EXPORT INCENTIVESThe various incentive schemes available to exporters may somewhat reduce the anti-export bias resulting from the protection of domestic markets by high tariff and import prohibitions. (a) EXPORT SUBSIDIES AND FINANCEThe Export Expansion Grant Fund scheme (EEGF) provides cash inducement to exporters who have exported a minimum of N500,000 of processed products. The objective of the scheme is to stimulate exporters to expand the volume of exports, diversify their product and market coverage. Exporters of processed products are entitled to a 4% grant on their total annual export turnover, subject to receipt of confirmation of repatriation of export proceeds from the CBN and presentation of a performance bond from any of the recognized financial institutions. (b) DUTY DRAWBACK, AND MANUFACTURE-IN-BOUND SCHEMESA drawback scheme allows for duties (including other levies) charged on raw materials used in the manufacture of products to be refunded upon the export of the final products. The purpose of this scheme is to encourage manufacturing for exports. The scheme is to provide automatic refunds of up to 60% upon initial screening by the Duty Drawback Committee; the balance of the funds is granted upon final processing of the application. To be eligible, applicants must be companies incorporated in Nigeria. Under the manufacture-in-bond scheme, raw materials may be imported duty-free for the production of export goods, on the basis of a bond issued by a recognized financial institution. The bond is discharged upon production of proof of export and repatriation of foreign exchange. (c) EXPORT PROMOTION AND ASSISTANCEThe Export Development Fund (EDF) was set up by the Government to help finance certain activities of private exporting companies. These include: participation in training courses, symposia, seminars, and workshops; advertising and publicity campaign in foreign markets; product design and consultancy; participation in trade mission, buyer-oriented activities, overseas trade fairs, exhibitions, and sales promotion; collection of trade information; organization of export groups; and studies in respect of setting up export-oriented industries. The maximum grant per company for each activity is 50% of the total direct cost approved, up to maximum of N200,000. (v) EXPORT PROCESSING ZONESThe law establishing EPZs was enacted in 1992 and supports the establishment of industrial and businesses within demarcated zones, principally for export purposes. EPZs are also being used to address the infrastructure and regulatory deficiencies inhibiting export-oriented companies in Nigeria.
