The Head of Research, Sea Empowerment Research Centre, SEREC, Dr. Eugene Nweke has alleged that the authorities of the Nigeria Customs Service, NCS has imposed a 4% charge on the Cost, Insurance, and Freight, CIF value of imports instead of the Free On Board,FOB value which according to him is not ideal.
Nweke who stated this in a statement in Lagos on Wednesday lamented that the imposition of a 4% charge on CIF value instead of FOB value by the Service was not ideal and professional since customs duties and charges were typically calculated based on the FOB value which he said represented the value of the goods at the point of export.
He pointed out that using the CIF value which included the cost of insurance and freight, may lead to double taxation and increase the overall cost of imports.
Nweke added that the imposition of a 4% charge on CIF value without proper notification and circular may create uncertainty and confusion among importers and customs brokers adding that the implementation of the 4% charge without the required presidential notification to the lawmakers and official pronouncement may be considered unilateral and not in line with the provisions of the customs law.
“In the light of this, the implications of this situation are significant as many cargo undergoing duty payment and clearance processes are presently trapped across customs ports. This may lead to delays and congestion at customs ports due to the uncertainty and confusion surrounding the 4% charge.
“The imposition of a 4% charge on CIF value may increase the overall cost of imports which may be passed on to consumers. The unilateral implementation of the 4% charge may lead to a loss of revenue for the government as importers may seek to avoid the charge by using alternative routes or modes of transport, thus, the fear of increasing smuggling activities may be inevitable.
“The imposition of a 4% charge on CIF value without proper notification and circular may damage the reputation of the customs authorities and the industry as a whole, undermining trust and confidence in the system, especially by foreign investors”, he submitted.
Nweke who is a former National President of the National Association of Government Approved Freight Forwarders, NAGAFF admitted that the situation on the ground was critical as many cargo would be trapped across customs ports due to the uncertainty and confusion surrounding the 4% charge.
He, therefore, submitted that the customs authorities should take immediate action to address this situation by providing clarity on the implementation of the 4% charge, including the basis for calculation and the effective date.
He insisted that the customs authorities should issue a circular to inform importers and customs brokers of the changes to the customs regulations, engage with stakeholders including importers, customs brokers, and freight forwarders to address their concerns and provide guidance on the new levy.
Analysing the NCSA 2023 provision for the 4% levy, the former NAGAFF boss, thereafter, acknowledged that the provisions of Part V, Section 18 of the Customs Act 2023 focused on the financing of the NCS operations noting that the section established the framework for the NCS to maintain bank accounts and receive funding from various sources, including import duties, user fees, budgetary provisions, and grants.
He further admitted that the 4% FOB value of imports was a significant provision as it established a minimum revenue stream for the NCS, even as he pointed out that the provision also allowed for an increase in the percentage subject to approval by the National Assembly.
“The section also emphasizes the importance of transparency and accountability in the determination of user fees and tariff regimes. The Board is responsible for determining these fees and regimes subject to approval by the government and the National Assembly”, he said.
On the implication of this implementation, he said, “The implications of these provisions are significant as they affect the revenue generation and operations of the NCS. The 4% FOB value of imports provides a stable source of revenue for the NCS, while the provision for an increase allows for flexibility in response to changing economic conditions.
“The emphasis on transparency and accountability in the determination of user fees and tariff regimes is also important as it helps to promote stability and continuity in revenue generation and trade facilitation.”
Photo: Dr. Eugene Nweke, Head of Research, Sea Empowerment Research Centre.
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