This marks a significant shift from the current practice, where Customs duties fluctuate frequently, sometimes changing twice a day, with approximately 40 adjustments made this year.
By Johnson Atoukudu
The Presidential Committee on Fiscal Policy and Tax Reforms has proposed setting the Customs import duty rate at an exchange rate of N800 per dollar for the remainder of the year.
This marks a significant shift from the current practice, where Customs duties fluctuate frequently, sometimes changing twice a day, with approximately 40 adjustments made this year. These fluctuations have mirrored the volatile foreign exchange market, with exchange rates ranging from N900 to N1,700 per US dollar this year, causing widespread criticism from the business community.
Committee Chairman Taiwo Oyedele announced this new approach yesterday during a discussion on the tax panel’s activities in Lagos. Oyedele, a former partner at PwC Nigeria, emphasized that the frequent changes in the import duty rate by the Nigeria Customs Service (NCS), driven by the volatile foreign exchange market, hinder businesses from adequate planning.
His words: “When we did the budget, we said naira to dollar will be N800, now it is way more than N1,000. People need to plan.
“So now, we are saying to the government, can you please sign an order that says for the purpose of paying import duty, we shall use N800 for the rest of the year, till December. So, we have proposed N800.”
Customs typically use FX rates recommended by the Central Bank of Nigeria (CBN) for import duties, based on trading activities in the official FX market.
Many analysts have criticized this approach, arguing that it disrupts business planning.
As a solution, Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), suggested that Customs should set a quarterly exchange rate between N800/$ and N1000/$ for import duty assessments.
Additionally, Oyedele stated that the committee has recommended consolidating the over 100 different tax collection agencies at the federal, state, and local council levels into a central tax agency, the Nigerian Revenue Service.
The committee also advised implementing zero-based budgeting and introducing long-term appropriation.
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