FACT CHECK: Has Customs Reduced Tariff On Imported Vehicles?

A news website recently posted that the Nigerian Customs Service had reduced tariffs on imported vehicles popularly known as “tokunbo.”

Goodnews: Customs finally Slashes import Duty on Car to 20%

Verification: On April 4, a news website posted on its website that the federal government through the Nigerian Customs Service has reduced tariffs on imported vehicles.

The online news site wrote: “The Nigeria Customs Service (NCS) has reviewed the duty rate on imported used vehicles, also known as, tokunbo from 35 per cent to 20 per cent, 9news Nigeria learnt.

“The duty rate is applicable on Common External Tariff (CET) trade portal, under HS Code 8703 to a 20percent duty rate.

“Clearing agents, however, expressed shock that command officers were not aware of such development until they called their attention to it.”

Background:

Although there have been speculations recently over the reduction of customs duty on imported vehicles, there has not been any official communication from the agency on the reduction.

In the same vein, one of the national newspapers reported on April 3, 2022, that the Customs had refuted claims of reduction in tariff of tokunbo cars.

“The Nigeria Customs Service (NCS) has debunked claims that it has reduced duty on vehicles from the current 35 per cent to 20 per cent.

“Deputy Comptroller of Customs and the National Public Relations Officer of the service, Timi Bomodi, confirmed to The Guardian that the alleged 20 per cent duty rate was ‘just a mix-up,’ stressing that the 35 per cent duty subsists.

But Bomodi discarded the speculations, saying: “There is no reduction in the duty of vehicles, it was just a mix-up. All of that will be sorted out by Monday.” He added that anyone that made any payment based on the error on the portal would be made to pay the difference.

Also, Checks by Daily Trust on the website of the Customs Service showed no updated information on the matter.

Despite the fact that President Muhammadu Buhari signed the Finance Bill on December 31, 2020, which stipulates a downward review of Excise Duty rates on tractors and motor vehicles for transportation, the Customs Service since then has not implemented the policy.

The federal government had concluded plans to slash the levy to be paid on imported cars from 35 per cent to five per cent. This is contained in the draft bill of the 2020 finance bill to be presented to the national assembly.

The bill later became law after it was passed by the National Assembly and assented by the president.

Details of the bill shared by the presidency also show that the import duty of tractors and motor vehicles for the transportation of goods is expected to be slashed from 35 per cent to five per cent.

The bill also grants tax relief to companies that donated to the COVID-19 relief funds under the private sector-led Coalition against COVID-19.

To improve ease of doing business, the bill also proposes that software acquisition now qualifies as capital expenditure.

Hajiya Zainab Ahmed, the Minister of Finance, Budget, and National Planning, had previously explained that the reduction in import duties and levies was targeted at reducing the cost of transportation.

Conclusion: Although there is a provision in the Finance Act for 2020 for import duties on vehicles to be slashed to five per cent in order to encourage local production, the implementation is still being processed and has not taken off yet. As such the claim by the online newspaper is misleading.

dailytrust