Import Duties to Be Calculated on Basis of Prevailing Exchange Rate on Date of Opening Form M – CBN Tells Importers
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By Our Reporter
The Central Bank of Nigeria (CBN) weekend ended the anxiety and about two months of confusion suffered by importers and customs agents on what foreign exchange rate their import duties should be assessed.
This was as a result of fluctuations in the exchange rate for Customs duty payments.
The apex bank said on Friday said that the prevailing exchange rate on the date the Form M was opened for the importation of goods will be adopted for calculating duties on imported goods effective Monday, February 26.
This was contained in a circular signed by the the Director Trade and Exchange Department of CBN, Dr Hassan Mahmud.
Mahmud said in the circular that the Customs is free to henceforth accept the exchange rate applicable on the date the importer opens his Form M, until the cargoes come into the country and cleared from the ports.
Part of the circular reads:
“Following the liberalization of the FX market on Willing Buyer — Willing Seller trading principle,
the Central Bank of Nigeria has noted the concerns of Importers of goods and services in the irregular changes in the Import Duty Assessment levies applied by the Nigeria Customs Service
These developments have further built uncertainties around the pricing structure of goods and services in the economy and creating abnormal increases in the final sale prices of items, which is largely driven by uncertainties, rather than traditional market fundamentals, with implications to near term inflation trend.
“To this effect, the Central Bank of Nigeria wishes to advise that the Nigeria Custom Service and other related Parties adopt the closing FX rate on the date of opening Form M for the importation of goods, as the FX rate to be used for Import Duty Assessment. This rate remains valid until the date of termination of the importation and clearance of goods by importers.
“This would enable the Nigeria Custom Service and the importers to effectively plan appropriately and reduce the uncertainties around varying daily exchange rate in determining their revenue or cost structure, respectively.
“Therefore, effective 26″ February 2024, the closing rate on the date of opening of Form M for the importation of goods and services would be the rates that would apply for the assessment of import duty. This supersedes the requirements of Memorandum 9, J (2) of the Central Bank of Nigeria Foreign Exchange Manual. (Revised Edition), 2018.
While the CBN is mindful of the initial volatility and price distortions in the aftermath of the FX market liberalization, the Bank is confident that these reforms, would in the medium term, ensure stability in the market and entrench market confidence necessary to attract investment capital for the growth and development of the Nigerian economy”.
The Central Bank of Nigeria (CBN) weekend ended the anxiety and about two months of confusion suffered by importers and customs agents on what foreign exchange rate their import duties should be assessed.
This was as a result of fluctuations in the exchange rate for Customs duty payments.
The apex bank said on Friday said that the prevailing exchange rate on the date the Form M was opened for the importation of goods will be adopted for calculating duties on imported goods effective Monday, February 26.
This was contained in a circular signed by the the Director Trade and Exchange Department of CBN, Dr Hassan Mahmud.
Mahmud said in the circular that the Customs is free to henceforth accept the exchange rate applicable on the date the importer opens his Form M, until the cargoes come into the country and cleared from the ports.
Part of the circular reads:
“Following the liberalization of the FX market on Willing Buyer — Willing Seller trading principle,
the Central Bank of Nigeria has noted the concerns of Importers of goods and services in the irregular changes in the Import Duty Assessment levies applied by the Nigeria Customs Service
These developments have further built uncertainties around the pricing structure of goods and services in the economy and creating abnormal increases in the final sale prices of items, which is largely driven by uncertainties, rather than traditional market fundamentals, with implications to near term inflation trend.
“To this effect, the Central Bank of Nigeria wishes to advise that the Nigeria Custom Service and other related Parties adopt the closing FX rate on the date of opening Form M for the importation of goods, as the FX rate to be used for Import Duty Assessment. This rate remains valid until the date of termination of the importation and clearance of goods by importers.
“This would enable the Nigeria Custom Service and the importers to effectively plan appropriately and reduce the uncertainties around varying daily exchange rate in determining their revenue or cost structure, respectively.
“Therefore, effective 26″ February 2024, the closing rate on the date of opening of Form M for the importation of goods and services would be the rates that would apply for the assessment of import duty. This supersedes the requirements of Memorandum 9, J (2) of the Central Bank of Nigeria Foreign Exchange Manual. (Revised Edition), 2018.
While the CBN is mindful of the initial volatility and price distortions in the aftermath of the FX market liberalization, the Bank is confident that these reforms, would in the medium term, ensure stability in the market and entrench market confidence necessary to attract investment capital for the growth and development of the Nigerian economy”.
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