How decline in vehicle importation, others down Customs revenue

As Nigerians continued to cope with the high rate of duty on imported vehicles, which brings the total clearing cost to 70 per cent of the vehicle’s price, the Nigeria Customs Services (NSC), has recorded a 4.5 per cent drop in its revenue collection.

In the first half of 2023, not less than 70 per cent drop in vehicle importation into the country was recorded, latest data from the agency has revealed.

The NCS in June 2023 confirmed the increase of import duty on vehicles from 39.54 per cent to 39.62 per cent.

But the parameters for determining clearing costs have changed. There is a charge of 35 per cent import duty on imported vehicles plus an additional 35 per cent levy, which brings the total clearing cost to 70 per cent of the vehicle’s price.

Although, this 39.54 per cent to 39.62 per cent increase in clearing charge was a move by the government to discourage importation while encouraging locally manufactured cars in Nigeria.

However, the global trade disruption, flotation of the exchange rate and other factors led to a 4.5 per cent drop in revenue collection.

NCS collected a total sum of N1.3trillion in the first six months of 2023, as against N1.4trillion realised in the same period of 2022.

There is no doubt about the fact that the recent 40 per cent hike in the exchange rate for cargo clearance at the seaports and the increase in tariff on imported cars by a terminal operator, Ports & Terminal Multipurpose Limited, had led to about a 70 per cent drop in the sale of imported used cars.

Recently, the Central Bank of Nigeria and the Nigeria Customs Service took the ongoing foreign exchange reforms to the maritime sector with a 40 per cent increase in the dollar-to-naira exchange rate used for calculating the import duty.

The NCS had a few weeks ago raised the exchange rate used for the calculation of import duty from N422.30/dollar to N589/dollar.