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Despite public outcry over cost of consumer goods in the market, the Federal Government has proposed to earn N1.6 trillion from Customs duty and Value Added Tax (IVAT) on consignments coming into Nigerian ports between 2024 and 2025.
Although government has exempted Liquefied Petroleum Gas (LPG) from imports from VAT and customs duty, findings, however, revealed that government’s earnings from Customs duty would gulp N818.7 billion under its revised 2024 – 2026 Medium-Term Fiscal Framework (MTFF). Even though the floating exchange rate in the payment of Customs duty is fluctuating, the proposed revenue expected is N372.14 billion and N446.56 billion between in 2024 and 2025 respectively.
Also, VAT in the MTFF is N445 billion in the period as N202.29 billion is expected to realise in 2024 and N242.75 billion in 2025. More than 10 times between March and April, the Central Bank of Nigeria (CBN) has raised the exchange rate for calculating import duty in the seaports. With the incessant increments, importers opening Form M today would require more money to pay import duties than those who opened Form M in the past with a lower exchange rate for cargo clearing.
Findings from the Nigeria Customs Service (NCS)’s trade portal on Monday this week, for instance, indicated that CBN had raised the exchange rate for calculating import duty at the nation’s seaport to N1,457.014/$1 from N1,414.599/$1posted on Friday last week, representing an increase of N42.415 in the exchange rate of each dollar needed to clear goods at the port.
Also, in April 29, 2029, Customs duty was reduced to N1,164.84/$1 from N1,327.35/$1 charged in April 22, 2024, however, CBN reduced the exchange rate for import duty twice in less than four days by 7.54 per cent from 1,238/$1 to N1,150/$1.
The exchange rate was also adjusted on April 18, 2024 and April 22, 2024, leading to a decline of N88. In March 15, it was N1,612/$1; March 16th, N1,593/$1; March19th, N1,572/$1; March 23rd, N1,448/$1; March 26th, N1,405/$1; March 28th, N1,364/$1; March 29th, N1,303/$1; April 18th, 1,238/$1 and April 22, N1,150/$1.
Before the latest reduction in the exchange rate, Customs agents had said that the floating exchange rate in the payment of Customs duty payment had negatively affected the volume of cargoes at the port as people no longer import goods. Worried by the increase, the Association of Nigerian Licensed Customs Agents (ANLCA) said that Federal Government and the economic handlers must think outside the box in ensuring that the frequent increase in customs exchange rate is stopped.
The National President of ANLCA, Emenike Nwokeoji, complained that the increase in customs exchange rate from N1,356 per $1 to N1,431/$1 within 24 hours had brought hardship on Nigerians, leading to business uncertainties at the ports, thereby creating distrust and a loss of confidence between importers and customs brokers as two transacting entities.
He noted the regular reviews of Customs duty rates had led to weaker domestic currency, which makes imports more expensive, while stimulating exports by making them cheaper for overseas customers to buy. Nwokeoji noted that the sudden disruptive shift/review of customs duty had eroded confidence and trust between clients nationally and internationally.
According to him, the review would made Nigerian exporters to earn less, with little or no added value to domestic products. Nwokeoji said: “Those charged with the economic management of our God-given resources, ought to be thinking outside the box for solutions that does not frustrate the lives of the people, at least, not for this long. “The government really needs to do something very fast, in order to lessen the burden of families and businesses.
It’s daily becoming unbearable for the ordinary Nigerian to survive. Nigeria Labour Congress (NLC), Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Lagos Chamber of Commerce and Industry (LCCI) and all the economy related interest groups should join ANLCA to pressure the Federal government to back down on these increases that does not do anyone any good.”
Recall that in June 2023, when the Customs duty was raised by CBN from $422.30 to $589, shippers entertained the fear that they would pay more on imported goods. In September 2022, the Customs exchange rate was jerked up from $409 to $422.3, an increment of $13.3.
Meanwhile, CBN has authorised banks to sell foreign exchange freely at market-determined rates, aligning with President Bola Tinubu’s commitment to a single exchange rate regime. This move, according to the government, aims to attract investment and address concerns raised by multilateral lending organisations about the negative impact of multiple currency rates on the economy. Also, the CBN issued a new circular that removes the previous cap on exchange rates quoted by International Money Transfer Operators (IMTOs).
The circular signed by the Director of Trade and Exchange department, Hassan Mahmud was titled: ‘Removal of Allowable Limit of Exchange Rate Quoted by the International Money Transfer Operators.’ To boost liquidity, the financial regulator said IMTOs were to quote exchange rates for naira payout to beneficiaries based on the prevailing market rates at the Nigerian foreign exchange market.
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