Navigating Stability: Locking in Customs Import Duty Rates to Stabilize Trade 

On May 30, 2024, the Presidential Committee on Fiscal Policy and Tax Reforms (the “Committee”) in Nigeria presented a proposal to the Federal Government, recommending a fixed exchange rate of N800 per dollar to calculate customs import duty throughout the remainder of 2024.  

Key Reasons for the Proposal 

• Volatile Import Duty Rate: The import duty rate, which follows the FX rates set by the Central Bank of Nigeria (CBN), currently fluctuates significantly due to the volatile FX market. 
• Response to Inflation: The Committee proposed this fixed rate in response to Nigeria’s rising inflation, which currently stands at 33.69%. 
• Need for Predictable Planning: With Nigeria’s heavy reliance on imports, stable rates are essential for effective business planning and budgeting. 
• Impact of Import Duty Spikes: Frequent spikes in the import duty rate by the Nigerian Customs Service (NCS) have significantly disrupted businesses. 
• Mitigation of High Costs: Setting a fixed import duty rate would help cushion the impact of high costs of imported goods on Nigerians amid escalating inflation. 

Implications for Stakeholders 

1. Business Stability: A fixed import duty rate will facilitate better planning and budgeting for businesses, minimizing the risk of unforeseen cost increases due to FX rate fluctuations. 

2. Stable Pricing: Businesses will be able to forecast import costs more accurately with a fixed rate, potentially stabilizing the pricing of imported goods and reducing costs, which boosts consumer confidence and competitiveness. 

3. Inflation Mitigation: Stabilizing import costs can help alleviate inflationary pressures, contributing to overall economic stability. 

4. Operational Efficiency: A fixed exchange rate simplifies import duty calculations, reducing administrative burdens and potential errors, thus improving efficiency within the government and particularly within the NCS. 

5. Investor Confidence: Predictable import costs can encourage investment, especially in sectors that rely on imported materials, boosting economic activity and growth over the long term. 

6. Revenue Impact: The fixed rate could slightly reduce revenue if the market exchange rate surpasses N800 to N1,000 per dollar, unless offset by more robust economic activity. 

Stay Updated with SimmonsCooper Partners 

As these regulatory changes unfold, it is crucial to stay informed and prepared. SimmonsCooper Partners provides guidance and legal insights to navigate these changes effectively. For detailed insights or assistance with compliance, please reach out to us at info@scp-law.com or visit our website at www.scp-law.com.