Temporary importation permit in Nigeria is a concession for duty and other taxes and importation procedure waiver, by Nigeria Customs on certain import equipment. In this piece of information, we shall tell our readers all things about temporary importation permit. Firstly, we will list goods and equipment that can apply for temporary import permit. Secondly, we shall state in clear terms, the updated qualifying factors for this concession. Thirdly, we will state all requirements to process temporary importation permit. Fourthly, we shall discuss in detail, all the procedures and process to obtaining the permit.
Furthermore, we will use an example from a job to demonstrate possible questions and answers. These questions and answers are experiential from our previous engagements. Our goal is to give to the public, a comprehensive information on the subject, such that is not available elsewhere. Keep reading; feel free to contact us for seamless handling of inbound and outbound cargos from Nigeria.
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ITEMS FOR TEMPORARY IMPORTATION PERMIT
Very few machineries and equipment are eligible for importation procedure and duty waiver. The Nigeria Customs gives grant for temporary importation to the following list of machines and equipment:
- Super cranes used for petrochemical construction, oil and gas exploration and related approved projects
- Dredgers usable for soil erosion projects or oil drilling operation.
- Barges, pontoons, tugs for oil and gas exportation and exploration with government approval
- Ships, vessels or boats
- Aircrafts
- Oilrigs and accessories thereof
- Other items as may be approved by the board of Custom and Excise.
CONDITIONS FOR PERMIT TO IMPORT TEMPRARILY
Below are the qualifying conditions for consideration to import on temporary basis in Nigeria.
- In the first place, the item in question must be a specialized equipment, and in the list above. Otherwise, must be usable for a government-approved project. The board of Customs and Excise determines on case basis if other equipment are eligible.
- Similarly, to be eligible for temporary importation grant, the equipment must be of very high value, usually not less than $100,000.
- The machinery or equipment must be for time-bound project, usually within one-year use. The Nigeria Customs reserves the right to renewal of permit on expiration. Ordinarily, the total allowable period, including extension periods is two years. However, the Nigeria Customs may grant further extension as it deems fit.
- Equally, the import equipment must be for re-export, usually for the approved period, unless otherwise extended on initial expiration.
- Similarly, the importer is to make sure that such equipment for waiver is not available for rent and purchase in Nigeria.
- In addition, the importer must not have imported the equipment before seeking concession to import temporarily. In fact, the approval to import on temporary basis is part of the import requirements for this kind of importation.
- Moreover, the permit to import on temporary basis is not available for consumer goods and regular vehicles.
- What is more, temporary importation permit is not transferable to another importer.
REQUIREMENT FOR TEMPORARY IMPORTATION PERMIT
Goods for temporary importation are exempt from pre-importation procedure and documentation. Thus, importers of such goods are not required to process SONCAP, Form M and PAAR. The following are list of documents required for the application for temporary import permit in Nigeria.
- Proforma invoice for the goods.
- Copy of importer’s certificate of incorporation plus memorandum and articles of association.
- Importer’s three years tax clearance certificate, including current year.
- Letter from importer addressed to a licensed agent authorizing the agent apply for temporary importation permit. The letter must state the reason for the concession request. Vagmon e-Grup & Logistics Ltd is a foremost cargo logistics agent in Nigeria. Contact us today for seamless processing and clearance of all goods into and out of Nigeria.
- Covering letter by the authorized agent, to Customs applying for permit to import temporarily on behalf of the importer.
- Lease Agreement between the owner of the equipment and the Nigeria importer. Such lease must specify the equipment, the period for lease, the lease cost and other lease conditions.
- Technical manuals or brochures describing the import item(s).
- Copy of registration certificate for vessels & rigs only.
- Again, copy of measurement certificate for vessels and rigs only.
- Permit to operate in Nigerian waters from the Federal Ministry of Transport.
- Photocopy of the complete contract(s) between the importer and the main contractor, clearly indicating the duration of the contract and providing information about the purpose of the equipment to be temporary imported. The contract must further show the signatories. Where there is no direct contract between the Nigerian company holding the main contract with the government or NNPC (OML holder), and the importer of the item, all contracts with sub-contractors must be included to establish the link.
APPLICATION FOR TEMPORARY IMPORT PERMIT
We will use a real engagement with a client to treat this section for clearer understanding. Hence, below presentation is a communication with one of our clients before engagement. Therefore, we implore you to read carefully and ask whatever question makes the process clearer to you.
Our client writes:
I am writing to get a proposal from you on how to get a Temporary importation permit for a vessel we intend to bring on use and return basis.
The vessel is a specialized one, equipment for offshore seismic Survey for an IOC. It is a project is for 30 days. The value of the vessel is 2m US dollar, and with freight cost of 20k US dollar.
Kindly provide me with all you require to process permit, and any additional information.
Looking forward to your response.
Our response:
Dear Sir,
We are pleased to place an order with your company for processing of temporary importation permit –TI, for the importation of an ocean vessel on use and return basis. Kindly find below TI processing cost, terms and guidelines for your attention and approval.
TI PRICING | ||
S/NO. | DESCRIPTION | AMOUNT-NGN |
1. | Lump sum TI processing service charge | as agreed |
2. | Customs clearance and registration (in port/no offshore) | as agreed |
Total amount payable as service charge | NGN | |
3. | 7,5% vat – excluded | |
4. | Duty estimation | NGN222,342,764.00 |
Terms and notes | ||
TI bond is actual duty plus 25% markup | ||
It is advisable to clear vessels at the port and transfer to desired offshore for cost optimization | ||
The HS code used in duty estimation is 89011, with 5% duty rate, applied on $2,020,000 (assumed as cost and freight). Customs have final say on actual duty. | ||
Service pay terms: at least 50% upfront, balance pay before final delivery of vessel | ||
Service timeline:
| ||
We await your response.
Client writes:
Dear Vagmon,
Good evening and many thanks for your responses.
I have few questions:
- The duty estimates of NGN222,342,764.00 is on the value of 2m USD. Are we to pay this to custom or do will need a bond? Will this bond be in full cash or what are we going to do.
- What is the requirement or things you need from compass to process the TIP.
Our response:
Dear Sir,
The duty estimate of NGN222,342,764.00 is on the value of $2,020,000 (assumed as value and freight). We are using instant exchange rate of NGN1,601.028/USD1, and is not payable in cash, but in the form of bank surety or bond. The surety value is the duty plus 25% markup. See more information on duty calculation: CALCULATING CUSTOMS DUTY; NIGERIA AS EXAMPLE.
Kindly see attached document for requirements and more information – as in previews paragraphs on this page.
We are here to take additional questions that you may have sir.
Client writes:
Good morning.
Thanks for the information.
Do we need to have the actual duty estimate in the account plus the 25% markup before we approach the bank for the bond? What is the process from this point? Need to understand how to approach the bank.
Waiting for your advice.
Our response:
Good morning and top of the day to you sir,
Here are the next steps to take:
- Award job and provide listed documents, including letter, appointing us to process TI (we can draft)
- Make at least 50% processing pay
- We apply and obtain TI approval from Abuja
- Copy of TI with stated bond will be given to you to approach your bank for bond
- We proceed to register TI with command to receive vessel
You do not necessarily have to deposit the duty and 25% mark-up value in your account, depending on your relationship with the bank. If you have a longstanding reputation with the dealer bank, they will issue the surety without cash. The bank understand TI bond very well, you seek to see the account manager and the foreign trade department with the copy TI.
Client writes:
Many thanks for your prompt and clear responses.
Kindly let us know if the temporary import permit is renewable, and for how long? In addition, how do we go about decommissioning and re-export? Furthermore, what if we desire to buy the vessel after use, must we re-export and import afresh? Awaiting your good response.
Our response:
Thank you sir for the praises, we believe that an informed client is better. Hence, we always want to be as clear as possible. See below for questions around decommissioning, re-export and outright purchase.
A Temporary Importation permit is for a year at first and is extendable twice for six months. A temporary importation can only be carried out for a maximum of two years, and Customs will only, in exceptional circumstances, grant extensions for a further three or six months.
On completion of the contract, items imported on temporary basis are to be re-export to the supplier. The agent is to follow export process and ship goods back.
A permit from Customs Headquarters Abuja is required in the event that temporarily imported cargo will remain in Nigeria permanently. You require an entry for domestic use with Customs at the initial port of entry prior to selling the goods to a third party in Nigeria. The import duty, surcharge, and VAT that are in effect at that point applies.
To cancel bond, the agent must demonstrate to the Nigeria Customs Service that the re-export is complete or there is clearance through customs for domestic consumption. A letter from customs to the bond-issuing bank, with a copy to the clearing agent, will cancel the bond if the Nigeria Customs Service is satisfied with the documentary evidence.
CONCLUSION
Temporary importation permit is approvable for machineries and equipment for specialized projects. The importer must issue an authority letter to a Customs licensed agent, who approaches Customs with necessary documents for permit to import temporarily. The importer must receive approval from Customs before initiating importation on use and return basis. The permit once issued must have security with a bank bond. Bank bond is the normal duty that would ordinarily be payable on such goods, plus 25% mark-up. Temporary import permit is for an initial period of one year, but renewable for six months and twice. Lastly, temporary importation permit is bound to specific importer, thus, is not transferable. Contact us today for hassle-free documentation, inbound and outbound cargo clearance and delivery.