Customs
Customs grants N2.3trn duty waivers in 2021, generates N1.34trn revenue
The Nigerian Customs Service has given duty exceptions to importers to the tune of N2.3trillion in 2021, a 194.65 percent increase from the N779.74bn waivers granted in 2020.
The exemptions included Value Added Tax relief granted on imports, waivers and concessions on import duties, ECOWAS Trade Liberalisation Scheme, surcharges, Comprehensive Import Supervision Scheme, as well as excise and levies.
These data are contained in the 2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper.
Across the world, import duty waivers, exemptions, and concessions are used by governments to protect local businesses and jobs, but they can also be abused and become a major drain on the national economy.
Also, import duty waivers are vehicles to meet specific economic goals, especially in protecting local industries, creating jobs, and promoting exports.
A breakdown of the aggregate Customs’ exemption showed waivers on import duties were valued at N435.85bn, surcharge (7 percent of import duty) was N30.38bn, while Common External Tariff levy was N1.42tn.
Similarly, Comprehensive Import Supervision Scheme was valued at N130.04bn; ECOWAS Trade Liberalisation Scheme, N72.91bn; iron levy, N115,879; National Automotive Council levy, N41.39m; and VAT (import VAT), N208.24bn
The data revealed that the highest jump in aggregate Customs exemptions was in the Common External Tariff levy, which jumped from N223.99bn in 2020 to N1.42tn in 2021.
In 2020, import duty was N305.65bn, the surcharge was N21.29bn, the Common External Tariff levy was N223.99bn; the Comprehensive Import Supervision Scheme was N28.87bn, while ECOWAS Trade Liberalisation Scheme was N1.08bn.
Also, the iron levy was N113,776, the National Automotive Council levy was N1.08bn, and Import VAT was N179.60bn.
The report said, “The exemption applied to imported goods covered by diplomatic privileges, military hardwares, fuels and lubricants, hospital and surgical equipment, aircraft (their parts and ancillary equipment), plant and machinery imported for use by companies in export processing zones, health, and medical supplies to abate the spread of COVID.
“Other exemptions include reliefs on the presidential initiative on COVID-19 supplies, import duty, and VAT on commercial airlines. Estimating the tax expenditure on customs and VAT relief granted on imports was constrained by the quality of available data.
“Tax expenditure estimated based on the Nigerian tax reference system amounted to N1.95tn including N1.419tn from waivers of common external tariff levy, which constitutes 72.6 percent of all customs tax expenditures.
The report further revealed that petroleum products (fuels and lubricants) accounted for 46 percent of the N216.88bn import duty waiver granted.
In 2021, China accounted for nearly half of the total relief granted, with Singapore, Netherlands, Togo, Benin, and India among the other top countries benefiting from these reliefs.
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