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In the wake of the recent liberalization of the foreign exchange market, importers have encountered uncertainties regarding the pricing of goods and services. Also, the inconsistent changes in import duties imposed by the Nigeria Customs Service (“NCS”) have further exacerbated these uncertainties, leading to disruptions in pricing and overall business operations.
INTRODUCTION
In the wake of the recent liberalization of the foreign exchange market, importers have encountered uncertainties regarding the pricing of goods and services. Also, the inconsistent changes in import duties imposed by the Nigeria Customs Service (“NCS”) have further exacerbated these uncertainties, leading to disruptions in pricing and overall business operations.
To address a key part of these uncertainties, the Central Bank of Nigeria (“CBN”) on February 23, 2024, issued a circular, addressed to all Authorised Dealers, NCS, and the general public, on foreign exchange rates for import duty assessment (the “Circular”). The Circular was primarily issued further to the concerns raised by importers regarding the frequent changes in Import Duty Assessment levies applied by the NCS.
This pressing concern faced by importers of goods and services had built uncertainties around the pricing structure of goods and services in the economy and created abnormal increases in the final sale prices of items. Thus, the CBN in providing an immediate solution directed the NCS and other stakeholders to utilise the foreign exchange (“FX”) closing rate on the date of the opening of ‘Form M’[1] for the importation of goods, as the FX rate for import duty assessment.
We, therefore, highlight in this Newsletter, the major implications of the Circular for Authorised Dealers, NCS and other relevant stakeholders.
KEY IMPLICATIONS OF THE CIRCULAR
Amendment of the Revised Foreign Exchange Manual 2018
Previously, the Revised Foreign Exchange Manual 2018 had pegged the applicable exchange rate used for import duty payments to be the daily FX closing rate on the date of the duty assessment, as published by the CBN on its website.[2] However, the Circular has revised this provision and has mandated the use of 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.
Important Notice: The information contained in this Article is intended for general information purposes only and does not create a lawyer-client relationship. It is not intended as legal advice from Jackson, Etti, & Edu (JEE) or the individual author(s), nor intended as a substitute for legal advice on any specific subject matter. Detailed legal counsel should be sought prior to undertaking any legal matter. The information contained in this Article is current to the last update and may change. Last Update: October 1, 2024.
