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A maritime lawyer and Senior Partner at Akabogu & Associates has criticized the recent slash in Customs Duty payable on automobiles from 35 per cent to five per cent, stating that the duty slash should be made across the board and not on selected automobiles.
In a statement posted on his official LinkedIn page, Akabogu explained that “Last Thursday the Nigeria Customs Service (NCS) released a much-expected circular for the implementation of the Finance Act 2020 provisions purporting to reduce import duties payable on automobiles.
“Contrary to what most assume, import duty has not been reduced for cars. The Finance Act and the implementation circular reduced import duties for agricultural tractors, vehicles that transport more than 10 persons and vehicles for the transport of goods. Import duty for cars remains the same (35 per cent), while import levy which exists for brand new cars is reduced to five per cent. So if you want to import a brand new car today, your cumulative duty and levy will be 40 per cent, while for ‘tokunbo’, it will be 35 per cent.
“My interest in this issue is from maritime industry development and trade facilitation perspectives.
No doubt, the reduced import duties are a major step forward in pushing the agenda for more inclusiveness in that economic space. However, my submission is that the reductions do not go far enough for the purpose of achieving trade facilitation and maritime industry development.
“Amongst some other reasons, high import duties constitute one of the key drivers of car smuggling, which impacts economic activity in Nigerian ports negatively. Contrary to official theories, high import duties do not necessarily translate to increased Customs revenues from imported cars; it rather fuels smuggling through neighbouring countries and the vehicles end up paying no official duties. In addition, the port economy is robbed of terminal storage and handling income in addition to the cluster of support services that rely on car imports value-chain.
“From a trade facilitation point of view, the vehicles imported through Nigerian ports are made to remain in the ports for long periods of time due to inability of importers to clear, accumulating demurrage and disrupting the import process for other imports.
“If the government thought it fit to reduce import duties on automobiles, it should have been across the board, not the discriminatory application which has been seen. Simply, the import duty reduction for automobiles has not gone far enough.”
Recall that the NCS in a circular issued on February 18, 2021, with reference number NCS/T&T/DCG/HQ/S.52/Vol 2 signed by the Deputy Comptroller General of Customs, Tariff and Trade, DCG Isa Talatu informed all Area Commands and Federal Operations Unit to comply officially with the implementation of the Federal Government policy on reduction of import duties for vehicles.
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