Custom reduces the duty rate of importation of Cars from 35% to 20%

The Nigerian Customs Service has officially released a circular announcing the reduction of import duties on both used and new vehicles. 

In a statement by Timi Bomodi, Customs National Spokesman, the service said the new duty rate for both used and new vehicles is now 20% as against the 35% usually paid. The statement noted that implementation will take effect immediately.

The service revealed that on April 1, 2022, they migrated from the old version of the ECOWAS Common External Tariff (2017-2021) to the new version (2022-2026).

What Customs is saying

The statement noted that the reduction in import duties on new vehicles was as a result of a directive from the Federal Ministry of Finance in a letter marked; letter ref. no. HMF BNP/NCS/CET/4/2022 and dated April 7, 2022.

The statement reads; “On Friday the 1^st of April 2022, the Nigeria Customs Service migrated from the old version of the ECOWAS Common External Tariff (2017- 2021) to the new version (2022- 2026). This is in-line with WCO five years 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 Federal Ministry of Finance letter ref. no. HMF BNP/NCS/CET/4/2022 of 7^th April 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 NCS is on implementation of these policies in the hope that it achieves its desired objectives in line with National Automotive Policy and other fiscal policies of the government.

“The NCS has also activated the use of Chapters 98 and 99 of the CET, in accordance with WCO recommendation for national use by contracting parties, which in our case promotes industrialization

Through sectoral and sub-sectoral incentives for members targeted at economic growth, enhancement of security and minimized consumption of unwholesome goods.

“It should also be noted that the Automotive industry, bonafide assemblers, manufacturers of auto spare parts and other local manufacturers enhance technology transfer and skill acquisition, create jobs and increase per capita income.

“In Chapter 98 of the current CET – Bonafide Assemblers importing Completely Knocked Down (CKD) and Semi Knocked Down (SKD) are to enjoy a concession of 0% and 10% Duty rate respectively. While within ECOWAS, duty rate for same items are 5% and 10% respectively.

“Incentivizing their efforts through policy interventions guarantees a win-win situation for the nation in the long run.”

What you should know

·       Both new vehicles and used vehicles will now pay a duty rate of 20%. However, while used vehicles pay a 15% NAC levy, new vehicles will pay 20% NAC levy. This means that instead of paying the usual 35%, Nigerians will now pay 20%.

·       The 2020 finance bill signed into law provides for a downward review of import duty on tractors and motor vehicles for transportation, as well as levy to be paid on imported cars.

·       Duty rates are reviewed every five years and the old ECOWAS CET which was in place expired in 2021.