Import duty payment is a requirement for virtually all goods imported into Nigeria. Except goods from importers with Import Duty Exemption Certificate (IDEC), all importers pay import duty. Also, some gift items and items with certain predefined HS Codes are exempt from duty in Nigeria. For example, commercial juicer equipment with HS Code 8435100000 is classified as duty free. However, that an item is said to be duty free does not mean that importers of such items pay nothing to the government coffer. Therefore, the question is; what other payment do importers of duty free items pay? Before addressing this question, it’s important to ask; what determines import duty value?
This article will answer questions posed in the first paragraph. In addition, the article will present an example of import duty and other charges for an imported product in a 40 feet container.
WHAT DETERMINES IMPORT DUTY VALUE
The term import duty could mean two things. Firstly, it could mean surface duty (also called internal duty). Secondly, the term is also used by some to mean total duty. Import duty (ID) is a function of item value, freight cost, insurance premium and the HS Code. Mathematically, ID = X% of CIF (cost, insurance premium, and premium), where X represents duty rate based on HS Code.
Total duty is the summation of ID, Surcharge, CISS, ETLS and VAT. For details on the meaning of these acronyms and abbreviations, read also: CALCULATING CUSTOMS DUTY; NIGERIA AS EXAMPLE
The question of other charges payable besides the surface duty is also answered following the above link. Yes, the importer with duty free goods still pays for ECOWAS levy, the CISS and VAT (where applicable – some HS Codes are VAT free).
IMPORT DUTY: EXAMPLE OF 20 FEET CONTAINER
Let us now look at an example:
Item of import: Digestive Biscuit
HS Code (or tariff code): 1905310000
Duty rate: 35%, 5% VAT
Exchange rate NGN307/USD
FOB: USD23040 (NGN7, 073,280)
Freight Cost: USD2400 (NGN736, 800)
Insurance Premium: NGN11, 168.41
CIF: NGN7, 821248.41
Import Duty (surface duty): NGN2, 737,436.94
CISS: NGN70, 732.80
ECOWAS Levy: NGN39, 106.24
VAT: NGN543, 007.25
Total Duty: NGN3, 581,903.82
Shipping Company Local Charge (SC):NGN140, 100 (not usually more)
Terminal Handling Charge (THC): NGN154, 233
Clearing Services Charge: NGN150, 000
Duty is usually required for the importation of commodities into a country. Virtually all goods imported into Nigeria have some duty associated with it. Although some items are duty free, the importer still pays one form of levy or another. Vagmon Integrated Services is an expertise clearing agency that serves importers right. Feel free to contact us (+2349075526276) for whatever is the hassle. Our believe is that a problem without a solution is probably something else, not a problem.