CBN Announces New Changes to Custom FX Duty as Naira Advances Towards New Prediction
- The Central Bank of Nigeria has reduced the exchange rate, determining the amount used to clear goods at the port
- This followed the rebound of the Nigerian currency as the naira pushed back against the dollar for two straight days
- Meanwhile, analysts have criticised the use of Form M for import duty payment, citing the complicated trading process
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The currency rate used to determine customs charges at the country's seaports has been slashed by the Central Bank of Nigeria (CBN) by 0.8%.
Source: Getty Images
Following the positive movement in the value of the naira, the customs exchange duty rate was reduced on Wednesday, March 13, 2024, from N1,624.732/$ to 1,612.281/$, according to data retrieved from the Nigeria Customs Service's official trade portal.
This is on the back of a report that the naira pushed back against the dollar for two straight days, appreciating despite various forecasts.
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Recall that Goldman Sachs recently predicted that the naira would appreciate against the US dollar and exchange at N1 200/$ in 12 months.
Meanwhile, Charles Abuede, a financial analyst, said this is subjective and can be based on certain assumptions and expectations.
He stressed,
"This does not mean to say it is not achievable. I think the onus lies on the monetary and fiscal authorities to put in place friendly policies to aid the management of the FX market."
Nigerians to pay less
The customs duty rate dipped as the central bank reduced more than N12 for each dollar required to clear goods at the port as opposed to the previous exchange rate of N1,624.732/$.
Given that import tariffs are based on the dollar's value, importers who open Form M today will have to pay less to clear their goods.
This means that importers would pay less today when opening Form M today compared to those that opened it on Tuesday, March 12, in accordance with the recent direction from the apex bank to Customs to compute import duties using the rate in effect on the date that Form M is submitted.
What analyst said about Form M
Port users have criticised the policy of applying the exchange rate on Form M for import duty payment, citing that it will complicate the trading process.
The Association of Nigerian Licensed Customs Agents' national president, Emenike Nwokeoji, told BusinessDay that applying the Form M rate will result in different amounts of duty being paid on comparable imports.
He claimed it would further raise questions about the nation's system of prices for products and services.
“It will also create abnormal increases in the final sale prices of items, which is largely driven by uncertainties, rather than market fundamentals, and will have implications oninflationo.”
Nigeria customs again increases exchange rate
Legit.ng reported that the Nigerian Customs Service (NCS) has again raised its foreign exchange (FX) rate for tariffs and duties collection.
According to data from the federal government's single-window trade portal, importers will now pay N1,624.732 per dollar as of Wednesday, March 12, 2024.
The new import duty rate comes as Nigerian currency against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) closed at N1,617.96/$1 on Monday, March 11, 2024.
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Source: Legit.ng
