Nigerian Govt reneges on promise, collects 70% tariff on vehicles
By David Ogah
Clearing agents, freight forwarders protest, Customs blames ministry • Stakeholders say it's ploy by NCS to meet N1.2tr revenue target
CONTRARY to the promise of the Federal Government to suspend the collection of a new tariff on imported vehicles till January 1, 2015, the Nigerian Customs Service (NCS) has actually begun the implementation of the regime. This development has drawn the ire of stakeholders, including clearing agents and freight forwarders at the Lagos ports.
The new regime made up of 35 per cent duty and 35 per cent levy has put the total tariff on new cars at 70 per cent. Two months ago, the Federal Government suspended the implementation of the new tariff till January 2015.
The clearing agents and
freight forwarders who at the weekend withdrew their services at the
ports decried what they described as hurried implementation of the 35
per cent levy on imported vehicles by the NCS.
The NCS's authorities in Lagos said the implementation was not on used vehicles
popularly known as 'tokunbo' but on brand new imported vehicles, adding
that they were empowered to begin the implementation two days ago. But
port users believe that the implementation was a ploy by the customs to
meet their revenue target of N1.2 trillion for this year.
"It is true that we were asked to suspend the implementation till next year, but the same Federal Ministry of Finance
sent another circular a few days ago that we can now collect the new
tariff on new vehicles so as to protect the local manufacturers that are
investing heavily in assembly plants in Nigeria. We are here to
implement the government's directives", said an authoritative customs
The chairman of Port and
Terminal Multipurpose Services Ltd (PTML) chapter of the Association of
Nigerian Licensed Customs Agents (ANLCA), Bola Adeniran, said the agents
were taken aback when they got to work to see that the 35 per cent
level had been inputted into the customs system.
According to him, the
implementation of the 35 per cent level was scheduled to take off in
January 2015 but was hurriedly implemented by the customs high command
without consulting or informing them.
"Agents are not satisfied
with the 35 per cent levy that was hurriedly implemented because the
government had said it would start by January but it was a surprise when
we all came to work this morning to see that the customs have already
started implementing it," he said.
The customs said they were only collecting the new tariff on new vehicles and that the former directive on used vehicles remained.
A customs source said: "The
implementation of 35 per cent levy was on new and not used vehicles
because implementation for used vehicles will be next year as directed
in the new circular from the ministry."
With the implementation of
the 35 per cent levy in addition to the 35 per cent import duty, the
effective tariff on imported vehicles now stands at 70 per cent.
The new vehicle tariff is
part of the Federal Government's new national automotive policy aimed at
protecting the local manufacturers from foreign competition.
The National Association of Chambers of Commerce,
Industry, Mines and Agriculture (NACCIMA) last week described the
policy as anti-people with the potential of increasing the hardship
faced by Nigerians.
With the implementation of the new duty and other tariffs a new car that was sold for N3 million before the Federal Government introduced the new automotive policy may now cost N5.1 million.
Under the new automotive
scheme, the Federal Government in 2013 raised the duty and levy payable
on imported new and used cars from 20 per cent to 70 per cent, pointing
out that the initiative was aimed at encouraging local production of
But experts and various
stakeholders have repeatedly cautioned the Federal Government against
the danger of implementing the policy without first putting in place
necessary infrastructure such as uninterrupted electricity supply and
good road networks.
They said that without
adequate facilities, the cost of production may push the cost of locally
assembled cars beyond the reach of most Nigerians.
The National Automotive
Council explained recently that Fully Built Units (FBU) cars falling
under H.S.Code 87.03 would attract a duty of 35 per cent and 35 per cent
"All FBU import (except
used vehicles) with Bill of Lading dated not later March 31, 2014 and
arrival date not later than June 2014 will pay the old rate,
irrespective of the dates of opening of form 'M' and the letter of credit.
"Used vehicles will be
imported at 35 per cent without levy till June 30th, 2014 (Now December
31, 2014) renewable as required by the Ministry/NAC, to manage market
"Fully Built Unit (FBU) Commercial vehicles falling under H.S. Code 87.02, 87.04, 87.06, 87.16, shall attract 35 per cent duty without levy.
"Fully built tractor under
H.S. Code 87.01 shall attract 0 per cent duty without levy, until local
capacity is ascertained by NAC," the council said.
On the other hand, local
assembly plants would import their Completely Knocked Down (CKD) at zero
per cent duty, Semi Knocked Down (SKDI) at five per cent duty and Semi
Knocked Down (SKD11) at 10 per cent import duty.
According to NAC, all
machinery and equipment imported for the purpose of vehicle assembly
shall attract zero per cent import duty and be free of Value Added Tax
The President, National
Council of Managing Directors of Licenced Customs Agent (NCMDLCA), Lucky
Amiwero, said recently that the policy was capable of encouraging
diversion of cargoes to neighbouring countries.
He urged the government to
put in place the necessary platform and should allow the proposed
assembly plants to start production before the implementation of the new