The Central Bank of Nigeria (CBN) has instructed the Nigeria Customs Service (NCS) and other relevant entities to use the closing rate in the official foreign exchange (FX) window when calculating import duty.
This directive was issued in a statement released on Friday by Hassan Mahmud, Director of the Trade and Exchange Department at the CBN.
The CBN emphasized the importance of using the FX rate at the time of importation for assessing import duty until the clearance procedures are completed.
The CBN expressed concerns about the inconsistent changes in import duty assessment fees by the Nigeria Customs Service. These fluctuations have caused uncertainties in pricing for goods and services, resulting in unexpected increases in final sale prices.
The CBN pointed out that these changes are driven more by uncertainties than traditional market factors, which could potentially impact inflation trends in the near future.
In order to tackle these challenges, the CBN has advised the Nigeria Customs Service and other relevant parties to use the closing FX rate on the date when Form M for importation is opened as the basis for calculating import duty. This rate will be valid until the importation and clearance processes are completed.
The directive states that the closing rate on the date of Form M opening will be used for import duty calculation starting on February 26, 2024. Form M is a declaration of intent to import physical goods into Nigeria.
The CBN has made it clear that this new directive replaces the requirements outlined in “Memorandum 9, J (2) of the Central Bank of Nigeria Foreign Exchange Manual (Revised Edition), 2018.”
While acknowledging the initial volatility and price distortions that followed the liberalization of the FX market, the CBN is confident that these reforms will eventually stabilize the market and create the necessary confidence to attract investment capital for the growth and development of the Nigerian economy.
