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IMPORT DUTY: Clearing Agents Reject CBN Policy on Official FX Rate on ‘Form M’
R-L: National President of ANLCA, Emenike Nwokeoji, Governor CBN, Yemi Cardoso, and Comptroller General of Customs, Wale Adeniyi
By DAPO OLAWUNI
Barely one month after the Central Bank of Nigeria (CBN) directed Nigeria Customs Service (NCS) and other related parties to adopt the closing rate in the official foreign exchange (FX) window for import duty, clearing agents under the aegis of Association of Nigerian Licensed Customs Agents (ANLCA) have rejected the policy, arguing that it will add more challenges to the import and export process.
National President of ANLCA, Mr Emenike Kingsley Nwokeoji in an interaction with maritime journalists in Lagos on Thursday lamented that the CBN failed to consult with the Nigeria Customs Service and other relevant stakeholders before issuing out such policy, hence it could not be implemented.
Recall that ANLCA had visited the CBN last month to make its position clear on how the floating exchange rate was affecting import and export business and the attendant danger to Nigerian economy.
“All we did to get that letter (directive) out from CBN is like effort in futility. They wrote that letter without consultation with stakeholders. Getting to implementation stage, we noticed that it is not possible to adopt the closing exchange rate on Form M. It would be fraught with a lot of challenges.
“For instsnce, if Mr ‘A’ opens his form M with exchange rate at N700 to import mobile phone and Mr ‘B’ opens his own for N900 to import same product, meanwhile on the Nigerian Customs system, there is a fixed amount of duty percent to be paid on the product, when both importers arrive the port, the duty payable would be different, and they are going into the same market.
For purpose of planning, let their be a figure for the exchange rate” Emenike insisted.
According to the ANLCA President, the technical people to implement the CBN directive is the Nigeria customs, but right now, they cannot implement it because the CBN did not even invite them for any input before issuing the directive.
“So, as it is, nothing changes, we are back to square one, in fact, the situation has become worse” he said
According to the CBN circular of last month , the FX rate at the point of importation should be used for import duty assessment until the termination date and clearance are finalised.
“Following the liberalization of the FX market on the Willing Buyer-Willing Seller trading principle, the Central Bank of Nigeria has noted the concerns of Importers of goods and services in the irregular changes in the Import Duty Assessment levies applied by the Nigeria Custom Service,” CBN said
“These developments have further built uncertainties around the pricing structure of goods and services in the economy and created abnormal increases in the final sale prices of items, which is largely driven by uncertainties, rather than traditional market fundamentals, with implications to near term inflation trends.
“To this effect, the Central Bank of Nigeria wishes to advise that the Nigeria Custom Service and other related Parties adopt the closing FX rate on the date of opening Form M for the importation of goods, as the FX rate to be used for Import Duty Assessment.
“This rate remains valid until the date of termination of the importation and clearance of goods by importers.
“This would enable the Nigeria Custom Service and the importers to effectively plan appropriately and reduce the uncertainties around varying daily exchange rate in determining their revenue or cost structure, respectively.”
The financial regulator said the directive is to take effect from February 26 2024, and the closing rate on the date of opening of Form M for the importation of goods and services would be the rates that would apply for the import duty assessment.
The Form ‘M’ is a declaration of intention to import physical goods into Nigeria.
CBN said the new directive supersedes the requirements of “Memorandum 9, J (2) of the Central Bank of Nigeria Foreign Exchange Manual. (Revised Edition), 2018”.
“While the CBN is mindful of the initial volatility and price distortions in the aftermath of the FX market liberalization, the bank is confident that these reforms would in the medium term, it would ensure stability in the market and entrench market confidence necessary to attract investment capital for the growth and development of the Nigerian economy,” the apex bank said.
