By; PETER NOSAKHARE, Kaduna
Federal Government, using the Nigerian Customs Service, NSC, granted the sum of 2.29 trillion naira, as Customs’ tax exemptions in 2021, an 194.65 per cent increase from the 779.74 billion Naira waivers granted in 2020.
This exemptions included Value Added Tax, VAT, relief granted on imports, waivers and concessions on import duties, ECOWAS Trade Liberalisation Scheme, ETLS,, surcharges, Comprehensive Import Supervision Scheme, as well as excise and levies.
This is following the data in the 2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper. The paper disclosed that this exemption was a humongous amount of revenue forgone relative to the N1.34tn collected that was collected as total Customs’ revenue in 2021.
All over the world, import duty waivers, exemptions, and concessions are used by governments to protect local businesses and jobs, but they can also be abused and become a major drain on the national economy.
Meanwhile, import duty waivers are vehicles to meet specific economic goals, especially in protecting local industries, creating jobs, and promoting exports.
A breakdown of the aggregate Customs’ exemption showed waivers on import duties were valued at 435.85 billion Naira, surcharge (7 per cent of import duty) was N30.38bn, while Common External Tariff levy was 1.42 trillion naira.
Similarly, Comprehensive Import Supervision Scheme was valued at 130.04 billion naira; ECOWAS Trade Liberalisation Scheme, N72.91bn; iron levy, 115,879 million naira; National Automotive Council levy, N41.39m; and VAT (import VAT), 208.24 billion naira.
The data revealed that the highest jump in aggregate Customs’ exemptions was in the Common External Tariff levy, which jumped from 223.99 billion naira in 2020 to 1.42 trillion naira in 2021.
In 2020, import duty was N305.65bn, surcharge was 21.29 billion naira, Common External Tariff levy was 223.99 billion naira; Comprehensive Import Supervision Scheme was 28.87 billion naira, while ECOWAS Trade Liberalisation Scheme was 1.08 billion naira.
Also, iron levy was 113,776 million naira, National Automotive Council levy was 1.08 billion naira, and Import VAT was 179.60 billion naira.
The report said, “The exemption applied to imported goods covered by diplomatic privileges, military hardwares, fuels and lubricants, hospital and surgical equipment, aircraft (their parts and ancillary equipment), plant and machinery imported for use by companies in export processing zones, health, and medical supplies to abate the spread of COVID.
“Other exemptions include reliefs on presidential initiative on COVID-19 supplies, import duty, and VAT on commercial airlines.
Estimating the tax expenditure on customs and VAT relief granted on imports was constrained by the quality of available data.
“Tax expenditure estimated based on the Nigerian tax reference system amounted to N1.95tn including 1.419 trillion naira from waivers of common external tariff levy, which constitutes 72.6 per cent of all customs tax expenditures. Import VAT tax expenditures amounted to 111 billion naira.
Of the 1.419 trillion naira from waivers of common external tariff levy, import duties exemption certificate amounted to 1.417 trillion naira.”
The report further revealed that petroleum products (fuels and lubricants) accounted for 46 per cent of the 216.88 billion naira import duty waiver granted.
In 2021, China accounted for nearly half of total relief granted, with Singapore, Netherlands, Togo, Benin, and India among the other top countries benefiting from these reliefs.
