Nigeria began the implementation of Economic Community of West African States (ECOWAS) Common External Tariffs (CET) on January 1, 2015. ECOWAS CET seeks to liberalize trade in line with WTO guidelines by harmonizing tariff charges within ECOWAS countries and strengthening its common market. Nigeria is among ten ECOWAS member countries which have adopted the CET thus far.
The implementation was a move toward compliance with ECOWAS’ five-band regional CET. In line with the World Customs Organization five years review of the nomenclature, the Nigerian Customs Services (NCS) in April 2022 migrated to the new ECOWAS CET tariff. The ECOWAS parties are expected to adopt the reviewed tariffs based on regional considerations and national economic policy. Nigeria adopted all tariff lines with few adjustments from the CET.
Nigeria maintains several supplemental levies and duties on selected imports that significantly raise effective tariff rates. For example, Nigeria has an effective duty (tariff, levy, excise, and value added tax (VAT) where applicable) of 50% or more on over 80 tariff lines. These include about 35 tariff lines whose effective duties exceed the 70% limit set by ECOWAS. Most of these items are luxury goods such as yachts, motorboats, and other vehicles for pleasure (75%). Also included is alcohol (75% to 95%) and tobacco products (95%). In addition, Nigeria places high effective duty rates on imports into strategic sectors to boost the competitiveness of the local industries. In agriculture, wheat (85%), sugar (75%), rice (70%), and tomato paste (50%) see the highest supplemental tariffs. In the mining sector, salt (70%) and cement (55%).
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 retained a duty rate of 20% for used vehicles as was transmitted by ECOWAS with a National Automotive Council (NAC) levy of 15%. New vehicles will also pay a duty of 20% with NAC levy of 20% as directed by the Ministry of Finance in April 2022.
In October 2013, the Nigerian government announced the Nigerian Automotive Industry Development Plan (NAIDP), which seeks to expand domestic vehicle manufacturing. The NAIDP had imposed a 35% levy on automobile imports, in addition to the 35% tariff already levied, for an effective total duty of 70%. The NAIDP allows companies that manufacture or assemble cars in Nigeria to import one vehicle for every one manufactured in Nigeria.
Nigeria Customs Service’s customs and excise tariff is based on the Customs Cooperation Council Nomenclature (CCCN). Duties are either specific or ad valorem, depending on the commodity, and are payable in Nigerian naira upon entry. Import tariffs are non-preferential and apply equally to all countries outside the Economic Community of West African States (ECOWAS). A local insurance company must insure all imported goods. A special duty may be imposed on imported goods if the government feels that such goods are being dumped or unfairly subsidized, thus threatening established or potential domestic industries.
Duties previously paid on abandoned, re-exported, damaged, or destroyed goods may be refunded. However, a claim must be made before the goods leave customs custody. A destruction certificate must be obtained from a customs officer to obtain a refund of duties paid for goods that were subsequently destroyed. Upon presentation of a customs certificate attesting to the landing of goods in another country, duties paid on such goods in Nigeria will be refunded.
The import process in Nigeria involves a number of steps. Before any importation is carried out, the following must be done by the importer:
- Register the company name in Nigeria and hence have a Certificate of Incorporation/Registration of the company in Nigeria.
- Register the company with the Federal Inland Revenue Services (FIRS) with an up-to-date proof of Tax Payments, upon which a Tax Identification Number (TIN Number) is allotted, with a valid e-mail address tagged to it.
- Select a Bank of choice in Nigeria to act as the Authorised Dealer Bank (ADB). This is the Bank that will process the Form M / Pre Arrival Assessment Report (PAAR), as well as mediate among the Nigeria Customs Service (NCS), the importer and other bodies.
Once the above is done, the importer is ready to import into Nigeria. The following steps must be taken:
Step 1: The importer gets his Regulatory Certificates, e.g. the Product Certificate (PC), for items that are regulated.
Step 2: The importer activates the PC on the online single window.
Step 3: The importer opens a Form M on the Nigerian Trade Platform (Single Window system) attaching the required documents, e.g. the Insurance Certificate, the Proforma Invoice, the Product Certificate (when the item is regulated by SON), and submit it to the ADB.
Step 4: The ADB reviews/validates the Form M and sends it to the NCS.
Step 5: The NCS either accepts the Form M, or rejects it when not properly completed or lacking some information and/or documents.
Step 6: When the Form M is accepted by the NCS, the importer forwards a copy of the Form M to his exporter, who will in turn contact Cotecna, the International Accreditation Firm, with the Form M, the Final Invoice, the Bill of Lading/Airway Bill and the packing list, for the issuance of the SONCAP Certificate.
Step 7: The importer activates the SONCAP Certificate and applies for PAAR issuance on the Nigeria Single Window for Trade.
Step 8: The PAAR is issued and the importer commences the clearance of his goods.
Step 9: Shipping Company; Submission of import manifest to customs/NPA/Terminal Operator, brings in vessel, pays ship charges, pays NPA charges and Issues bill of lading.
Step 10: Terminal Operator; Terminal Handling/Weighing, Loading of Cargo, Issue bills for handling/ rent and delivers the goods.
EXPORTER
- Nominates agents (Forwarder)
- Get importer to open letter of credit
- Takes Insurance Policy for Cargo
- Pays all logistics services up to Port (if shipped on Free on Board)
FORWARDER
- Obtains Regulatory Certificate e.g. Product Certificate
- Arranges Transportation to Port
- Arranges inspection by NCS, SSS,NDLEA/ other Govt. Agencies
- Payment of Duty where applicable
- Payment of Shipping Company charges e.g Freight
- Books space with Shipping Agent
- Payment of Terminal Operators Charges.
SHIPPING COMPANY
- Brings in Vessel
- Pays Ships Charges
- Pays NPA Charges
- Issues Bill of Loading
TERMINAL OPERATOR
- Terminal Handling
- Loading of Cargo
- Issues Bills for handling and rent
RECIEVER’S AGENT ABROAD
- Armed with B/L does the following:
- Arrange inspection
- Pays Port and Shipping Charges.
- Transports Cargo to Importer