Controversy trails 15% NAC levy on used vehicles –

Controversy trails 15% NAC levy on used vehicles

By Steve Agbota, [email protected] 

Controversy has continued to trail the recent introduction of 15 per cent National Automobile Commission (NAC) levy slammed on imported used vehicles by the Nigeria Customs Service (NCS), barely one week after it slashed import duty on vehicles from 35 per cent  to 20 per cent.

The new levy, which was effected on the Customs system on Saturday, April 9, 202, has been stoking fire of disagreement among the nation’s maritime stakeholders especially clearing agents who described the new policy as illegality that contravenes the nation’s Finance Act.

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However, the clearing agents and motor dealers have argued that the NAC levy was an attempt by Customs to arm-twist importers, in order  to meet its yearly revenue target of N3 trillion  for 2022, even as they vowed not to comply with the controversial levy.

A statement by the National Public Relations Officer, Timi Bomodi, said the move was in compliance with the Economic Community of West Africa Common External Tariff. The statement read in part, “On Friday, April 1, 2022, the Nigeria Customs Service migrated from the old version of the ECOWAS Common External Tariff (2017- 2021) to the new version (2022- 2026). This is in line with World Customs Organization five years review of the nomenclature. The contracting parties are expected to adopt the review based on regional considerations and national economic policy.

“The nation has adopted all tariff lines with few adjustments in the extant CET. As allowed for in Annex II of the 2022-2026 CET edition, and in line with the Finance Act and the National Automotive policy, NCS has retained a duty rate of 20 per cent for used vehicles as was transmitted by ECOWAS with a NAC levy of 15 per cent. New vehicles will also pay a duty of 20 per cent with a NAC levy of 20 per cent as directed in the Federal Ministry of Finance letter ref. no. HMF BNP/NCS/CET/4/2022 of 7th April 2022.

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“It is instructive to note that domestic fiscal policy on the importation of motor vehicles and other items is targeted at growing the local economy in these sectors. The focus of NCS is on implementation of these policies in the hope that it achieves its desired objectives in line with National Automotive Policy and other fiscal policies of the government.”

The vehicle affected are HS Code 87032120,87032220, 87032400 both for Diesel and Gasoline/Fuel Vehicles.

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The stakeholders argued that the NAC levy was supposed to be collected on new vehicle imports at 35 per cent  to encourage local vehicle manufacturers and industries in Nigeria.

Daily Sun learnt that the implication of this new levy would see the price of used vehicles rise and  Nigerians would have to pay more tobuy such vehicles because clearing costs would have to be increased at the port as well.

Meanwhile clearing agents and motor dealers have concluded plans to embark on protest to shut down ports and motor shops if Customs fail to stop the 15 per NAC levy. This was as the Association of Nigerian Licensed Customs Agents (ANLCA) has urged its members not to pay the NAC 15 per cent levy.

National Vice President of ANLCA, Dr Kayode Farinto, in a recent post on a social media platform, urged members to jettison the policy which according to him is oppressive.

“National Automotive Council is a levy impose by virtue of National Automotive Design And Development Council Act NO 6 of 2014 which was enacted to encourage locally manufactured vehicles to encourage Nigerians to go for Nigerian assembled vehicles and to protect our locally manufacture ones.

“Section 10 of the Act states that the Council shall establish a fund which shall consist of two percent Cost,Insurance and Freight (CIF), value of all imported automotive Fully Built Units (FBU) and automotive components Spares and Semi -Knocked down (SKD) units.

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“This simply applied to those importing new vehicles and new spare parts. Professional Colleagues, please do not pay any NAC levy on imported used vehicle as there is no law that compels you to do so.

“Let us collectively resist this, should you see any NAC levy whenever you want to make your declaration, do not assess this declaration. It is another attempt to swindle innocent Nigerians and force them to pay by some fifth columnist,” he said.

Speaking with Daily Sun, the National President, National Council of Managing Director of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, said what was approved for NAC was five per cent levy, the 15 per cent levy contravenes the nation’s Finance Act.

“I was a member of the committee set up by Federal Government in 2001 known as Taskforce on Reviewing of Port Charges on levies. Then NAC was dropped and the sugar levy was also dropped. And the levy that was approved in 2020 Financial Act is five per cent and there is no other levy approved.

“So, bringing NAC to 15 per cent is illegal, When you look at the whole policy, it is confusing and doesn’t make sense. The circular that was issued by the minister in March gives this clarity. The one Customs signed, which they referred to as migration, has to do with simply moving from Harmonised System Code (HSCODE) of the World Customs Organisation (WCO). And when you are migrating, you are dropping a lot of items, which are no more useful in trade by the whole world.

“So, we have HSCode, which is supposed to start from 2022 to 2027 because it is for five years. The one we are using now is from 2017 to 2022, so 2022 to 2027 is a new HSCode, that is the truth about it. So, the conflict is that you are having a 20 per cent duty on used vehicles, and they have 15 per cent on NAC, which Customs has reflected on its system, it contravenes the law on NAC,” he explained.

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According to him, the five per cent NAC duty, which was recommended by law, was for the cost of insurance and freight, adding that any other thing aside from this contravenes the law.

He pointed out that NAC was suspended because there were certain issues within that period.

“The NAC law, that is the National Automotive Design and Development Council, was passed in 2014. Under the financial provision, we have five per cent collection of cost for insurance, so if you are bringing in 15 per cent, you are contravening the NAC law” “If they say it is a levy, that means it is a new policy that is being introduced by the government; which has not been made public. If you are having a new policy, that means the first policy, which was initiated by NAC for the development of vehicles, was actually suspended; this was because within that time the automotive policy collapsed,” he argued.

He said there were conflicting pieces of information in that regard, the truth about it is that there is a  conflicting information from the government because the same ministry is having two circulars at a specific time.

He said  both the 2001 and 2020 Finance Acts did not say anything about 15 percent levy, which is why the introduction contravenes the two Acts. “The Finance Acts of 2001, 2020 did not contain all those things they are quoting.

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