Customs slashes duty on used and new vehicles
By Jeph Ajobaju, Chief Copy Editor
Import duty on used and new vehicles has been slashed from 35 per cent to 20 per cent by the Nigeria Customs Service (NCS), thanks to migration from the old ECOWAS Common External Tariff (2017-2021) to the new (2022-2026).
NCS National Spokesman Timi Bomodi announced in a statement that the tariff reduction is based on a circular from the Finance Ministry dated 7 April.
“On Friday the 1st of April 2022, the Nigeria Customs Service migrated from the old version of the ECOWAS Common External Tariff (2017- 2021) to the new version (2022- 2026), the statement said.
“This is in-line with WCO five years 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 Federal Ministry of Finance letter ref. no. HMF BNP/NCS/CET/4/2022 of 7th April 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.”
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Focus of NCS
Bomodi stressed that the focus of NCS is on implementation of these policie to achieve desired objectives in line with National Automotive Policy and other fiscal policies of the government.
“The NCS has also activated the use of Chapters 98 and 99 of the CET, in accordance with WCO recommendation for national use by contracting parties, which in our case promotes industrialisation.
“Through sectoral and sub-sectoral incentives for members targeted at economic growth, enhancement of security and minimized consumption of unwholesome goods.
“It should also be noted that the automotive industry, bonafide assemblers, manufacturers of auto spare parts and other local manufacturers enhance technology transfer and skill acquisition, create jobs and increase per capita income.
“In Chapter 98 of the current CET – Bonafide Assemblers importing Completely Knocked Down (CKD) and Semi Knocked Down (SKD) are to enjoy a concession of 0% and 10% Duty rate respectively. While within ECOWAS, duty rate for same items are 5% and 10% respectively.
“Incentivising their efforts through policy interventions guarantees a win-win situation for the nation in the long run.”
Explainer
Nairametrics explains that both new and used vehicles will now pay a duty rate of 20 per cent, but used vehicles pay a 15 per cent NAC levy and new vehicles 20 per cent NAC levy.
The 2020 Finance Act provides for a downward review of import duty on tractors and motor vehicles for transportation, as well as levy on cars.
Duty rates are reviewed every five years. The old ECOWAS CET expired in 2021.
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