Nigeria halves Customs duties on vehicle imports ahead of new green tax surcharge

The federal government has slashed in half its Customs duties on imported new and used vehicles to cushion the introduction of a new “green tax surcharge” on the fuel-heavy types.

On Monday, the Nigeria Customs Service (NCS) announced that import levies on brand-new vehicles will be reduced from 20 percent to 10 percent while import duties on used vehicles, or Tokunbo, will be cut from 15 percent to five percent.

The directive, issued by the Ministry of Finance, accompanies earlier plans to introduce a Green Tax Surcharge on imported vehicles with large-capacity engines from July 1 to lower carbon emissions.

Imported vehicles with an engine size of 2,000 cubic centimetres (cc) to 3,999cc (engines of 2.0 to 3.9 liters) are subject to a two percent levy while vehicles with an engine size of 4,000cc and above are subject to a four percent levy.

“This policy excludes mass transit buses, electric vehicles (EVs), and locally manufactured vehicles are excluded from this green charge surcharge. The vehicles that are to pay are those that are above 2,000cc,” Abdulahi Maiwada, national public relations officer of the Service, told BusinessDay.

BusinessDay found that most full-sized and luxury SUVs feature engines within the 2,000cc to 3,999cc range. These include some models of the Toyota Land Cruiser, Volvo XC90, and Mercedes-Benz GLE and id-size to heavy-duty pickups.

Many sports cars and hot hatches also use high-output engines. Notable examples are the Porsche 911 (3.0L – 3.8L) and the Honda Civic Type R.

The Nigerian government had earlier tried to ease tariffs on fully built passenger vehicle imports in April dropping them from 70 percent to 40 percent.

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Importers of used cars in Nigeria face a layered tariff structure that begins with a 20 percent Customs import duty on the Cost, Insurance and Freight (CIF) value, followed by a 7 percent surcharge computed on the duty.

That is followed by a 15 percent National Automotive Council levy, a 0.5 percent ECOWAS Trade Liberalisation Scheme levy for vehicles sourced within West Africa, and a 7.5 percent Value Added Tax.

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Murtala Muazu, comptroller in charge of Tariff, System Audit and Coordination at the NCS explained in a technical presentation that the Green Tax Surcharge differs from conventional fiscal measures and would therefore require a distinct assessment process  part of which includes a simplified implementation mechanism through the HS Code declaration platform.

Sensitisation across Customs zonals headquarters are ongoing.