News

April 24, 2024

Current exchange rate determines duty — Customs

Customs

Wale Adeniyi, Customs CG

The Nigeria Customs Service (NCS) says the prevailing exchange rate set by the Central Bank of Nigeria (CBN) determines its rates of import duty collection and not market forces.

The Spokesperson of NCS, Abdullahi Maiwada, said this in an interview with the News Agency of Nigeria (NAN) on Wednesday in Abuja.

Maiwada said that importers transact their businesses in dollars, which required them to obtain “Form M” from the CBN.

NAN recalls that the Nigeria Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) had recently suggested that the collection of customs duty should be charged in Naira instead of dollars.

The President of NACCIMA, Dele Oye, made the call in response to an April 8 circular by the CBN stopping the further use of foreign currency collateral for Naira loans.

Oye had suggested that all bonafide government transactions should also be done in the country’s legal tender.

According to the NCS spokesperson, the service collect duty on imported items using the prevailing rate for its calculations, while exporters use the Nigerian Export Proceed (NXP) form to repatriate their earnings.

He said that the use of the rate was aimed at converting the value of imported items into the Naira equivalent in order to appropriately assess their worth.

“The dollar rate is being used to calculate imported goods to ensure the requisite foreign exchange earnings for the country.

“If people export, it earns us foreign exchange because they will bring dollars back to Nigeria.

“If they are bringing dollars back, when they want to export items, they need to use dollars to buy items into Nigeria,” he said.

Maiwada said that customs value was based on the cost of purchasing the imported items, which involved Cost, Insurance and Freight (CIF).

“Based on that, we will be able to arrive at the customs value, and even the evaluation involves processes at arriving at the value of the item.

“If that value is in dollars, it will be converted to Naira, and the algorithms will be applied, which determines the percentage rate of duty,” he said.

He said that algorithm referred to a set of rules or procedures used by the NCS to calculate the amount of duties and taxes payable on imported goods.

“These algorithms take into account factors such as the value of the goods, their country of origin, any applicable trade agreements or tariffs, and any exemptions or preferences that may apply,” he said.

He said that fluctuation in exchange rate affected trade processes when applied in the clearance of consignments.

According to him, trade is required to be predictable so that issues such as the calculation of landing cost of items and profits can be determined.

He said that unpredictable processes of transactions were inimical to trade facilitation.

Meanwhile, the Comptroller-General of NCS, Adewale Adeniyi, announced that in the first quarter of 2024, CBN approved 28 different exchange rates for calculation of import duty.

He said that such fluctuations resulted in an average applied exchange rate of N1,314 to the dollar in the clearance of customs goods within the quarter.