FG commences enforcement of 5% duty on imported cars

Despite the cries by stakeholders and automakers in Nigeria against the implementation of the downward review of Import Duty on imported vehicles from 35 per cent to 5 per cent as contained in the Finance Act, 2020, the Federal Government through the Nigeria Customs Service (NCS) has commenced the enforcement of the controversial 5 per cent duty on imported vehicles.

The Management of the Nigeria Customs Service in a recent Circular referenced NCS/T&T/DCG/ HQ/S.52/VOL.11 and signed by Deputy Comptroller- General of Customs in-charge Tariff and Trade, DCG T.M Isa has charged officers in the enforcement of the law to ensure immediate compliance.

It noted that aside the reduction of the import duties on imported vehicles provided for in the Finance Act 2020, it further introduced fiscal incentive for the Aviation sector. Under the Finance Act, any airline registered in Nigeria, which provides commercial air transport services by owning or leasing aircraft is to enjoy free importation of aircraft, engines, spare parts and other components.

The Circular dated Thursday, February 18, 2021 and addressed to all Customs zones, commands, units, sector commands of border drill and office of the o/c strike force, directed for a wide circulation for immediate compliance. The Circular reads: “Pursuant to the assent by Mr. President, to the Finance Act, 2020 to support the implementation of the 2021 Budget of Economic Recovery and Resilience, certain changes to the fiscal framework regarding the importation of specific automotive vehicles into Nigeria have been introduced. “These reforms are designed to reduce the applicable levies and duties on vehicles, mitigate rising transport costs, boost road transportation and mass transit industry.

“Arising from aforesaid, Section 38 of the Finance Act, 2020 modified the First Schedule to the ECOWAS  Common External Tariff (CET), etc (Consolidation) Act by amending applicable duties and levies, as follows: “Reduction of Import Duty on Fully Built Unit (FBU) of Agricultural Tractors (HS) Headings 8701 from 35 per cent to 5 per cent, as applicable;

“Reduction of Import Duty on Fully Built Unit (FBU) OF Motor Vehicles for the transport of more than 10 person (HS Headings 8702) from 35 per cent to 10 per cent, as applicable; “Reduction of Levy on Fully Built Unit (FBU) of Motor vehicles for the transport of persons (cars) (HS Headings 8703) from 35 per cent to 5 per cent, as applicable; and “Reduction of Import Duty on Fully Built Unit (FBU) of Motor vehicles for the transport of goods (HS Heading 8704) from 35 per cent to 10 per cent, as applicable.”

Reacting to the the development, Chairman of Automobile Manufactures Association, Mr Tokunbo Aromoloran said this action, the government has taken the industry back by over 30 years, adding that the over $3 billion investment will suffer.

“It is said that government disregarded the the candid advise of industry stakeholders in this matter. As the African Continental Free Trade Area (AfCFTA) takes off, Ghana which borrowed our auto policy will overtake us and we will ultimately be the market for Ghana, South Africa and Morrocco.”

Also speaking, Hon Ahmed Aliyu Wadada, Chairman of Peugeot Automobile Nigeria (PAN) described the reduction of the import tax as a disincentive to investment in the Nigerian automotive industry.

He said that what the government has done is going for the short term gains it will make from collection of import duty at the detriment of the growth and development of the Nigerian automotive industry. He said: “In the overall medium and long term interest of Nigeria, the government has to reverse itself on this policy.

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