Home TIPS Is There A Reduction Of Levy For Imported Cars And Trucks?

Is There A Reduction Of Levy For Imported Cars And Trucks?

223

Daily Law Tips (Tip 761) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)

Introduction:
There is a federal law made on 31 December 2020 that became effective on 1st January 2021, that has brought in laudable changes in the Nigeria’s taxation climate. The Finance Act 2021 caused 80 amendments that affected about 13 existing federal laws. The law is popular for; the increase of Value Added Tax from 5% to 7.5%, creation of the Unclaimed Funds Trust Fund and the Crisis Intervention Fund of N500 Billion, and the exemption of low-income earners (earners of minimum wage or less) from Personal Income Tax, among other inventions. The 2020 Finance Act also affected the federal government levy on imported cars.

Imported Cars and the Finance Act:
One of the down sides of importation into Nigeria is the unpredictability of government levies. Practically, there is often no reliable algorithm for the assessment of importation levies/charges in Nigeria. Prior to 2021, import duty for cars was 30%, 35% for mass transit vehicles, trucks and tractors.

The Finance Act 2020, has caused a reduction of levy for imported cars in Nigeria. As from 1st January 2021, the Import duty on tractors has been reduce from 35% to 5%. Also, the import duty on mass transit vehicles (motor vehicles for the transportation of more than ten persons) and trucks (motor vehicle for transportation of goods) has been reduced from 35% to 10%, while import duty for import duty for cars has been reduced from 30% to 5%. Although the Finance Act was signed by the President of Nigeria on the 31 December 2020, the law came into force on the 1st January 2021. As such, the reduction of levy mandated by the law, became due on 1st January 2021.

Conclusion:
Relying on the new Finance Act 2020, import levy on cars, trucks and tractors have been reduced by the federal government of Nigeria. While the sprouting local automobile manufacturers lament over the reduction, the Federal Government of Nigeria insists that the reduction will reduce the cost of transportation in Nigeria. Also, the Comptroller-General of the Nigeria Customs Service, believes that the reduction will discourage unlawful importation (smuggling).

My authorities, are:

1. Sections 1, 2, 3, 4, 5 and 6 of the Constitution of the Federal Republic of Nigeria, 1999.
2. Sections 1, 38, 81 and 81 of the Finance Act, 2020. Click to download a free copy of the Finance Act, 2020 <https://learnnigerianlaws.com/free-copy-of-the-finance-act-2020/>.
3. Bassey Udo, “Why Nigeria is slashing duty on imported cars from 35% to 5% — Osinbajo” (PremiumTimes, 24 November 2020) <https://www.premiumtimesng.com/news/top-news/427760-why-nigeria-is-slashing-duty-on-imported-cars-from-35-to-5-osinbajo.html> accessed 21 March 2021.
4. Onyekachi Umah, “Nigerian Customs Cannot Charge Import Duties On A Personal Luggage” (LearnNigerianLaws.com, 28 May 2020) <https://learnnigerianlaws.com/nigerian-customs-cannot-charge-import-duties-on-a-personal-luggage/> accessed 21 March 2021
5. Onyekachi Umah, “Why You Cannot Import Bees And Bee-Keeping Equipments Into Nigeria” (LearnNigerianLaws.com, 6 February 2020) <https://learnnigerianlaws.com/why-you-cannot-import-bees-and-bee-keeping-equipments-into-nigeria/> accessed 21 March 2021.
6. Onyekachi Umah, “List of Fruits/Plants Prohibited from Importation in Nigeria” (LearnNigerianLaws.com, 5 February 2019) <https://learnnigerianlaws.com/list-of-fruits-plants-prohibited-from-importation-in-nigeria/> accessed 21 March 2021.
7. Onyekachi Umah, “It Is A Crime To Import Opium Into Nigeria”(LearnNigerianLaws.com, 17 October 2018) <https://learnnigerianlaws.com/it-is-a-crime-to-import-opium-into-nigeria/> accessed 21 March 2021.
8. Onyekachi Umah, “It Is An Offence To Import Live Fish Into Nigeria Without License” (LearnNigerianLaws.com, 5 October 2018) <https://learnnigerianlaws.com/it-is-an-offence-to-import-live-fish-into-nigeria-without-license/> accessed 21 March 2021.

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