The Nigeria Customs Service (NCS) has announced the implementation of a 4% charge on the Free On-Board (FOB) value of imports, in accordance with Section 18 (1) of the Nigeria Customs Service Act (NCSA) 2023.This charge is calculated based on the total value of imported goods, including both the cost of the goods and the transportation expenses incurred up to the port of loading. The NCS highlights that this charge is intended to support the NCS’s overall Revenue generation strategy and ensure compliance with the NCSA 2023 while also enhancing the agency’s operating efficiency.
Importers would be directly impacted by this new fee as it raises the price of shipping products into Nigeria. Consequently, businesses that depend significantly on imported items may incur increased operating expenses. This implies that the charge will be applied to a larger value base than just the product’s cost, taking freight and Logistics costs into account as part of the total computation. Importers, who are already contending with high logistics and operational costs, may find the 4% increase to be a financial strain.
Rationale behind the introduction of the FOB charge.
For instance, the additional fee may result in higher expenses for importers of automobiles, apparel, and gadgets. The Nigerian market would probably see higher prices for imported items as a result of these greater expenses being passed on to customers. Many businesses that are already struggling with high operational expenses are concerned about this development. Average Nigerian customers may see higher costs for a variety of imported goods, including electronics and household goods, as a result.
As businesses adjust to the new levy, consumers may need to brace for potential price hikes, which could impact purchasing power and overall cost of living. For the agency, the 4 percent FOB charge was introduced with the intention of strengthening the NCS’s operational capability, which is a substantial increase above the prior rate. Prior to this new directive, importers were subject to an administrative charge of 1% of the FOB value of all imports, as stipulated by the NCS.
Concerns over the continued collection of the 1% CISS fee.
Amidst all this, stakeholders have voiced concerns about the continued collection of the 1 percent Comprehensive Import Supervision Scheme (CISS). The CISS fee is a long-standing part of importers’ cost structures that was first levied as a regulatory fee to support Nigeria’s Destination Inspection Scheme. However, stakeholders across all categories are now questioning the Sustainability and fairness of having both the 1% CISS fee and the newly introduced 4 percent FOB charge levied simultaneously on imports.
In response, the NCS recognizes the significance of interacting with importers, clearing agents, and other pertinent stakeholders to guarantee a seamless transition to the new charge. The agency assures the Trade members that the Federal Ministry of Finance is being consulted extensively in order to address all concerns expressed by stakeholders. At the same time, stakeholders have been urged to support this legally obligatory initiative, as the provisions suggested under the NCS Act 2023 constitute a balanced approach derived from extensive talks with industry players, importers, and regulatory organizations.
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Under the leadership of Comptroller-General Adewale Adeniyi, the NCS has reiterated its dedication to transparency, fair trade, and effective revenue management. It will be essential for the government and NCS to have fruitful stakeholder discussions as Nigeria proceeds with these initiatives. Addressing issues with the dual charges, evaluating the effectiveness of inspection procedures, and taking into account possible changes to the fee structure could help reach a compromise between generating revenue and creating a more conducive business environment.