By Adedapo Adesanya
President Bola Tinubu has ordered the suspension of the Import Tax Adjustment levy on certain vehicles in the country, a move that will provide a breath of fresh air for vehicle importers.
This was one of four executive orders signed into law to curb burdensome taxation policy, according to the Special Adviser, Special Duties, Communication and Strategy, to the President, Mr Dele Alake, on Thursday.
Among the Executive Orders signed into law by the President includes the change in the date of the implementation of the Finance Act, 2023.
The President also deferred the commencement date of the changes contained in the Act from May 23, 2023, to September 1, 2023.
This is to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.
Business Post had recently spoken to some vehicle importers, who worried that the Nigeria Customs Service (NCS) had increased the exchange rate for cargo clearing at the port from N422.30/$ to N589.45/$, as verified on the customs official website.
This newspaper also saw a list of car clearing costs as a result of the rise in the exchange rate. This provided an insight that car importers going forward will be paying more as import duty tariff following the addition of close to 40 per cent.
This will be in addition to other clearing costs, including Value Added Tax (VAT), surcharge, ECOWAS Tax Liberalization Scheme (ETL), terminal charges, shipping charges, and clearing charges to Customs Licensed Agents.
Normally, an importer of the vehicle is meant to pay 20 per cent import duty and 20 per cent levy, amounting to 40 per cent of the total value of the vehicle, but with the jump in the exchange rate, there will be a need for many to adjust their car values.
By our calculations, this meant a car that used to clear for N4.2 million would suddenly jump close to N6 million.
One of the vehicle importers, who requested to be identified simply as Micheal from ID Autos in the Egbeda area of Alimosho Local Government, Lagos, said that the company was aware of the expected hike but had gotten an in-house directive to hold on to clearing their cargoes just yet.
Now, this latest move by the President will provide succour to many already battling a hike in the cost of fuel, electricity tariffs, and other basic amenities.
The spokesperson noted that “You will all recall that prior to the advent of this administration, certain tax changes were introduced via the Customs, Excise Tariff (Variation) Amendment Order, 2023 (henceforth referred to as “the Order”) published on the 8th of May 2023 and the Finance Act, 2023, which was signed into law on the 28th of May 2023.
“Among others, the Order introduced new Excise Duty on Single Use Plastics (SUPs), higher Excise Duties on some locally manufactured products, including alcoholic beverages and tobacco products, and Green Tax by way of Import Tax Adjustment on certain categories of imported vehicles.
“The Tinubu Administration has since noticed that some of the tax policies are being implemented retroactively with their commencement dates, in some instances, pre-dating the official publication of the relevant legal instruments backing the policies. This lacuna has created some challenges of implementation.”
He noted that the reasons behind upward adjustments of some of the taxes were designed to raise revenue as well as address environmental and public health concerns.
However, they have generated some significant challenges for affected businesses and elicited serious complaints amongst key stakeholders and in the business community.
“Let me mention some of the problems we have identified with the aforementioned tax changes. A document known as the 2017 National Tax Policy approved by the Federal Executive Council of the last administration prescribes a minimum of 90 days’ notice from the government to tax-payers entities before any tax changes can take effect.
“This global practice is done with a view to giving taxpayers and businesses reasonable time to adjust to the new tax regime. However, evidencing part of the gaps pointed out earlier, both the Finance Act 2023 and the Customs Excise Tariff Order 2023 did not give the required minimum notice period, thus putting businesses in violation of the new tax regime even before the changes were gazetted,” he added.
Mr Alake also explained that as a result of this, many of the affected businesses are already contending with the rising costs, falling margins and capacity underutilization due to the various macroeconomic headwinds as well as the impact of the Naira redesign policy.
