The Land Border Car Importation ban. Custom’s recipe for generating more revenue

[Warning: This is a rich mix of seriousness, humour and satire. If you have never read the author’s writings before, Handle with care and more of common sense]

Image result for car importOur eggheads in the Federal Ministry of Finance recommended that the President should ban the importation of cars through the land border, which actually means … Cotonou!

Mr President has done the same. The up and coming friend (yes, it churns my tummy too) of the masses, The Nigerian Senate led by my brother has disagreed with the Federal Government, and I will say, rightly so.

Simply, Nigeria Customs has given the Senate the latitude to flex some muscle and believe me, our Senators do have some intimidating six-pack to flex!

You probably continue to hammer Customs as inefficient, maybe because you do not know that they have been working hard to be the ultimate revenue earner for Nigeria. Truly, you are the one that is ignorant about the workings of the Customs service. Here is the proof that you do not know them!

A public-facing Imported vehicles Database is maintained by the Nigerian Customs, built around a very simple spreadsheet that must have costed them not more than N1m to set-up. Want to check it out?

Please hurry to https://verify.customs.gov.ng type in either your Car Chassis number or Engine Number or both. Presto, you will see Your Car Make, Model. Bill of Laden, Country of shipment, Port of Entry, the Duty Paid, Car Registration number and the Year of Transaction.

If that URL returns an error, try http://www.customs.gov.ng, select E-Services, then select Vehicle Tracking. It should be there.

You still did not find it? Ah! then they probably are still working on it. That is the proof that you know them! They are the clog in the wheel of progress.

So why does the Customs service not have such a simple record that is public-facing, in this age of e-everything?

The day such a reference Database comes up, so that the buyer and seller can jointly verify that indeed a duty was paid on their object of transaction, the day that anybody can check the Average duty paid by anybody, for say a Mercedes Benz E-Class, 2015 purchased in Germany and shipped in via RORO Tin Can Lagos, that is the day the racket will end and Nigerian Customs Officers will begin to look normal and not rotund like Cocoyam.

So, why and How do Nigerians bring in cars from Cotonou? How does it work? Here goes …

A. The Nigerian Import Duty is Cumbersome

The duty Computation is dependent on too many factors. Vary just one factor, and the duty changes to the disadvantage of the nation.

Sample Duty Computation: 7% surcharge, 1% administrative charge, 0.5% ECOWAS Trade Liberalisation Scheme(ETLS), and 5% VAT are to be made through one of the banks designated by the Federal Government for the Customs Area of Importation. This can be done by bank draft or by bank transfer. Example with 20% Import Duty (Adapted from http://www.ronishlogistics.com/CalcImportDuty.htm)

Assume you bought a car for N800K in Belgium.

– Free on Board (FOB) value = N800,000
– Freight (Shipping) = N200,000
– Cost+Insurance+Freight (CIF) = N1,000,000

Import duty – 20% on CIF 200,000
7% surcharge on duty 14,000
0.5% TLS levy on CIF value 5,000
1% CISS fee on FOB 8,000
2% NAC levy on CIF (or others, if applicable) 20,000
5% VAT on all above + CIF 62,350
Total payable to Customs 309,350

Landed cost of item in Nigeria N1.309.350

If the same car was imported through Cotonou, You will pay N1m The Duty Payable in Cotonou will be a mere CFA500,000 which by today’s exchange rate at xe,com is N255,000. Not much difference for small cars, but consider if the car has a value of N10m and not 1m? You got it!!

B. The Nigerian Duty System can be Cheated

If the car was bought at Cotonou, it can be brought into Nigeria by two ways:

1) Illegally, Paying nothing officially, and smuggling the car through the bush paths and smugglers route of Ogun State, Oyo State and Kwara State for the Southern market, and Niger and Kebbi State for the Northern market.

2) Declaring that it was bought for just N100,000. Repeat the Nigerian Duty calculationn for N100,000 instead of N1,000,000 and the duty payable will be a mere N30,935. Bringing the total duties paid in Nigeria and Cotonou to M255,000+N30,000 ie N285,000. Imagine if this was a car that costs N10m originally.

C. Payments of Duties in Nigeria is Difficult:

To pay the fees of my Son in Unilorin, I just log onto the University portal using the Matriculation Number, and pay with a debit card. It is as simple as that.

To pay for import duty, the process is spelt out at: https://www.customs.gov.ng/…/Destination_In…/import_duty.php

Importer shall continue to pay an administrative charge of 1% of FOB value of all imports based on the exchange rate on the approved e-Form M.
1. All imports shall continue to be assessed for duty at the C. I. F. value of the goods using the rate of exchange on the approved e-Form M.
2. It shall be the duty of the importer’s bank through which the e-Form M was processed to collect the amount of import duty as assessed. The Import Duty payment shall continue to be restricted to the bank that opened the e-Form M in line with the existing regulation. However, for non e-Form M transactions, payment can be made at any preferred authorised dealer bank.
3. The Designated Bank will match printed assessment notice with the electronically received assessment notice for the SGD. If the information tallies the bank will receive payments and issue signed Bank receipt.
4. The Bank then sends an e-confirmation message to NCS acknowledging receipt of duty and taxes in respect of the SGD.
5. The designated bank shall continue to electronically transfer all payments to the respective pool account with CBN.

Isn’t that Primordial?

D. Beninois Sellers are Bonded Warehouses

The Cotonou merchants all sell their cars from bonded warehouses. They do not clear the goods before selling it to Nigerians. It is the buyers that clears the goods. The Seller’s market in Cotonou is considered to be a bonded warehouse by the Beninois Government.

If you import through the Nigerian ports, the Ports Authority will charge you demurrage while you wait for customs to compute your duty. Customs will delay the computation and deliberately, so that you can bribe them, in exchange for not paying for the demurrage. There is their blackmail and extortion tool on the people, and it is very effective!

E. Custom Officers feed on the Nation

The customs officers will frustrate any reform that threatens their remarkably opulent lifestyles.

The Customs is one Institution that continues to frustrate Nigeria in its march to use Information Technology to enhance accountability and revenue mobilization, due to archaic practices meant to frustrate Importers and enrich the tin-gods who man the border posts and ports where goods come in. It is not only Cars. It includes Rice, Oil etc. Of course Petrol goes the other way!

According to Asaolu, Dopemu and Monday, Impact of Tax Reforms on Revenue Generation in Lagos State: A Time Series Approach (http://iiste.org/…/index.…/RJFA/article/viewFile/21977/22417) “Payments into the Government coffers were electronically linked to data bases that issued electronic receipt to taxpayers and closely monitored by an independent consultant to the State. Personal electronic tax clearance cards (e-TCC) were introduced for the first time in Nigeria and indeed in Africa. Tax collection was made more transparent to the taxpayers as they could access their records via the internet, and this made tax payments, more convenient and transparent to the taxpaying public”.

That is Lagos State of Nigeria! So, the Solution to the tummy-fat inducing racket is two pronged:

1. A Database of Custom duty payment, tied to the Engine, Chassis and Car Registration number.
2. A Fixed import duty, no matter the type, age and category of the vehicle. Not more than N400,000.

It is that simple, but in Nigeria, do we like simple things?

Let us try it. The cascade effect will be that:
1. People will ship cars to Nigeria with more confidence
2. Nigeria as a country will make much more money,
3. Nigerian Customs Officers will lose some weight
4. Those buggers will stop bugging you on Facebook to buy Custom auctioned vehicles
5. Everybody will live happily thereafter.

Oh … the Cotonou car merchants will all relocate to Nigeria and ship to Nigeria, because for them, it is just Business, indeed, they are all Lebanese!

Facebook Comments

Leave a Reply

Your email address will not be published. Required fields are marked *