It has been established that the Nigerian Customs Service (NCS) gave duty exceptions and waivers to importers amounting to N2.5 trillion in 2021, a 194.65 per cent increase from the N779.4 billion waivers it granted in 2020.
The exemptions included Value Added Tax (VAT) relief granted on imports, waivers and concessions on imports duties, Economic Community of West African States (ECOWAS) Trade Liberalisation Scheme surcharges, comprehensive import supervision scheme, as well as excise and levies.
These data are contained in the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper, which revealed that the exemptions translated to huge amount of revenue forgone relative to the N1.34 trillion the NCS collected as revenue in 2021.
Globally, governments use import duty waivers, exemptions and concessions to protect local businesses and jobs, but they are susceptible to abuse and could be major drains on the national economy.
Also, import duty waivers are vehicles to meet specific economic goals, especially in protecting local industries, creating jobs and promoting exports.
Details of the aggregate customs exceptions showed that waivers on import duties were valued at N33.85 billion surcharge or seven per cent of import duty amounted to N30.38 billion, while Common External Tariff (CET) levy reached N1.42 trillion.
Similarly, Comprehensive Import Supervision Scheme (CISS) was valued at N130.04 billion ECOWAS Trade Liberalisation Scheme, N72.91 billion, iron levy, N15.879, National Automotive Council (NAC) levy of N41.39 million and import VAT of N208.24 billion.
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The data revealed that the highest jump in aggregate custom was in the Common External Tariff levy which jumped from N223.19 billion in 2020 to N1.42 trillion in 2021.
In 2021, import duty amounted N305.65 billion, surcharge was N305.65 billion and N21.29 billion, Common External Tariff levy was N223.99 billion, comprehensive import duty generated N28.87 billion, while ECOWAS Trade Liberalisation Scheme was N1.08 billion.
Also, iron levy was N113.77 billion, while NAC levies amounted to N179.60 billion.
“Exemptions applied to imported goods covered by diplomatic privileges, military hard wares, fuel and lubricants, hospital and surgical equipment, aircraft parts and ancillary equipment, plant and machinery imported by companies in Export Processing Zones (EPZs), health and medical supplies to contain the spread of COVID-19 pandemic.
“Other exemptions include reliefs on the Presidential Initiative on COVID-19 supplies, imports, tax expenditure on customs and VAT relief. Tax expenditure estimated based on Nigeria’s tax reference, including N1.419 trillion from waivers of CET levy, which constitutes 72.6 per cent of total customs tax expenditures.
“Import VAT tax expenditures amounted to N111 billion of the N1.49 trillion from waivers of common external tariff Levy import duties exemption certificate amounted to N1.417 trillion,” the report added.
It further showed that petroleum products, especially fuels and lubricants accounted for 46 per cent of N216.85 billion import duty waivers granted, adding that in 2021, China, accounted for nearly half of total relief granted waivers, while Singapore, Netherlands, Togo, Benin Republic were also major beneficiaries.
