15% Customs Levy On Imported Cars Will Make Nigerians Poorer – Reports

By: Godwin Offor / May 9, 2022 / 881

Major stakeholders in the automotive industry have described as unbearable and an act of cruelty, the latest 15% levy on imported cars by the Nigeria Customs Service.

Recently, the Nigeria’s maritime industry boycotted the long time 2% levy on car importation by the Nigeria Automotive Company, to introduce a controversial 15% pay from dealers.

The development did not settle well with vehicle importers and agents who in their submissions believed introducing the 15% NAC levy was illegal and contravened financial acts, Naija News reports.

They recalled that the NAC levy was just 2% when it was introduced in the guise of boosting indigenous car manufacturing.

In their opinion, the above target was not achieved in any way.

A recent report by the PUNCH showed how agents were angered by the new levy on port clearing.

Naija News understands that the management of the NCS announced the 15% levy on imported vehicles in April 2022.

The levy met an already offending high cost of clearing imported vehicles under the guise of the NAC levy.

The Service had though claimed that the directive was from the Federal Ministry of Finance and that it was only implementing it.

The claims has, however, been viewed differently by importers and concerned stakeholders who have noted that the new levy was coming at the time when there is ongoing tense with the introduction of the Vehicles Identification Number for the valuation of imported vehicles.

The NCS had claimed earlier that the VIN valuation on imported used vehicles, is an artificial intelligence manual that drives documentation processes in an electronically digitized format.

It noted that the VIN was a child of necessity, adding that it addressed the discrepancies in duties payable on vehicles of the same maker, year, and model.

However, while the VIN was still generating controversy, which led to the eventual suspension of the platform for 30 days, the NCS early last month reviewed duty on imported used cars from 35% to 20 %, which complied with the directive from the Common External Tariff of Economic Community of West African States.

The Service, not being satisfied with the ECOWAS directive on duties, went further to introduce the 15% NAC levy, which enabled the Service to regain the 15% from the former import duty on imported used vehicles taking the duty payable on imported vehicles back to 35% that it was before the directive from ECOWAS, Naija News reports.

Meanwhile, importers are still mandated to pay 20% import duty plus 15% NAC levy, amounting to 35% on imported used vehicles.

A spokesperson for the NCS, Timi Bomodi, had in a statement said that the new tariff was in line with adjustments stipulated in the Common External Tariff of the Economic Community of West African States protocol, of which Nigeria is a signatory.

The statement read, “On Friday, April 1st, 2022, the Nigeria Customs Service migrated from the ECOWAS Common External Tariff, 2017- 2021 to the new version, 2022- 2026. This is in line with the World Customs Organisation’s five-year 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 the Federal Ministry of Finance letter Ref. No. HMF BNP/NCS/CET/4/2022 of April 7th, 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. The focus of the NCS is on implementing these policies in the hope that it achieves its desired objectives in line with National Automotive Policy and other fiscal policies of the government.”

“In Chapter 98 of the current CET Bonafide Assemblers importing Completely Knocked Down CKD and Semi Knocked Down SKD is to enjoy a concession of 0% and 10% Duty rate respectively. While within ECOWAS, the duty rate for the same items is 5% and 10%, respectively. Incentivising their efforts through policy interventions guarantees a win-win situation for the nation in the long run. Implementing the current CET takes immediate effect, please.”

Reacting, however, to the controversial levy on the imported vehicles, a former member of the NAC committee, Lucky Amiwero, said the 15% levy slammed on imported vehicles by the NCS was illegal and unnecessary.

According to him, it contravenes the nation’s Finance Act.

Amiwero said: “Well, the issue about that is not clear yet, because what the law says is that the 15% is on the NAC. And on the NAC law, I was a member of the committee meeting that nullified NAC, and it is only two percent for the NAC law.

“So, bringing NAC to 15% is illegal. It is not legal. The whole policy isn’t very clear and doesn’t make sense when you look at the whole policy. The circular, which the minister issued in March, gives this clarity. The one Customs signed, which they referred to as migration, has to do with simply moving from the Harmonised System Code of the World Customs Organisation. And when you are migrating, you are dropping many items which are no more useful in trade by the whole world.”

He observed that the NAC law passed in 2014 contained just a 2 percent collection for insurance.

The NAC law, the National Automotive Design and Development Council, was passed in 2014. Under the financial provision, we have a 2 percent collection of insurance costs, so if you are bringing in 15%, you are contravening the NAC law”, Amiwero noted.

He also said that the 2001 and 2020 Finance Acts did not say anything about the 15% levy.

The Finance Acts of 2001, 2020 did not contain all those things they were quoting. The Acts only contain issues of reduction. It doesn’t contain a levy. The two Acts did not contain those things; the Financial Act of 2020 doesn’t, so where did they get that one? So, that one must have been incorporated by them.

“The Finance Act of 2020 has provisions for reducing vehicles, and there is no levy on the Financial Act. There is no levy of 20 or 15%, so they should take it to the National Assembly, and in the Finance Act of 2021, there is nothing like the levy,” he said.

In his submission, the Lagos chapter chairman of the Association of Motor Dealers of Nigeria, Metche Nnadiekwe, faulted the government on the development.

He noted that it was wrong for the government to introduce such increased without involving members of the association as stakeholders.

Nnadiekwe said: “Some people are stakeholders in certain businesses, and when you want to introduce certain policies, why don’t you consider them? Can’t you even discuss with them to know how these people are going to be affected? So, it looks as if it is a calculated attempt to deal with certain people. We don’t know what is going on here, and, remember, wherever there is this type of thing, Nigerians will be the ones that suffer it.”

Meanwhile, a maritime lawyer and a Senior Advocate of Nigeria, Jean-Chiazor Anishere has said that the levy’s introduction was wrong, adding that a court order should restrain the imposition.

With the new levy, experts in the maritime sector want citizens to know that there will be a massive increase in vehicle smuggling with the introduction of the controversial 15% levy on imported vehicles coupled with the recent border reopening.

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