The Federal Government plans to slash levy on imported cars from 35 percent to five percent.
Vehicles imported into Nigeria attract 35 per cent import duty and another 35 per cent levy, bringing the tariff on such vehicles to 70 per cent.
The move to slash the levy to 5 per cent is contained in the draft copy of the 2020 Finance Bill. Details of the bill also show that the import duty on tractors and other motor vehicles will be slashed from 35 per cent to 10 per cent.
The bill also grants tax relief to companies that donated to the COVID-19 relief fund under the private sector-led Coalition Against COVID-19 (CACOVID).
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To improve ease of doing business, the bill also proposes that software acquisition now qualifies as capital expenditure.
The Minister of Finance, Budget, and National Planning, Zainab Ahmed, said the proposed reduction in import duties and levies is targeted at reducing the cost of transportation in the country.
In January 2019, the Comptroller-General of Customs, Hameed Ali, had urged the Federal Government to reduce levy on imported vehicles from 35 per cent to 10 per cent.
Ali had said at an occasion that the country imposes 35 per cent duty and 35 per cent levy on vehicles imported into the country and so if one imports a brand new vehicle, the person pays a 70 per cent duty.
“From what we have done and based on statistics, we discovered that this duty has now driven most of our importers to our neighbouring ports and also it has increased the rate of smuggling into this country of new vehicles.
“Having interacted with our stakeholders, we discovered from what they said that the sudden increase in duty is what is driving them away. And since 35% duty cannot be tinkered with, the one that can be tinkered with is the 35 per cent levy, which is a policy by the Nigerian government. The 35 per cent was put in order to encourage our automotive industry to ensure that it is developed, he said.
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According to him, “If we reduce the levy, the volume of cars that would be imported into Nigeria will increase and the revenue from the Nigeria Customs Service will increase. So we are advising that the government should review the levy and we are asking that it should be reduced to about 10 per cent. If you do that, then it will mean that the collective duty on a new vehicle will be about 45 per cent That is 35 per cent duty and 10 per cent levy. With that, we will eventually get an increase in the volume of vehicles that are imported, smuggling will be reduced and, therefore, we will realise more revenue and the lives of our people will be saved.”
