The Presidential Committee on Fiscal Policy and Tax Reforms has recommended that the federal government adopt an exchange rate of N800 per one US dollar for computing Customs import duty
This proposal was announced by the committee’s chairman, Taiwo Oyedele, during a press briefing in Lagos on Thursday.
Oyedele highlighted the challenges businesses face due to the volatility of the foreign exchange (FX) market, which causes frequent changes in the import duty rate. He emphasised the need for stability to allow businesses to plan adequately.
“When we did the budget, we said naira to dollar will be N800, now it is 1,000 something. People need to plan,” Oyedele stated. He further urged the government to sign an order that would set the exchange rate at N800 for customs import duty for the remainder of the year.
“When we did the budget, we said naira to the dollar would be N800, now it is 1,000 something. People need to plan.
“We are saying that the government can sign an order that says N800 per dollar should be used for paying Customs duties for the rest of the year till December. So, we have proposed N800,” he said.
Recall that the exchange rate for computing Customs duties has been witnessing rapid adjustments by the Central Bank of Nigeria.
The committee’s proposal aligns with the popular opinion of industry stakeholders who called for hedging of the exchange rate for Customs duties.
The director-general of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, said the exchange rate for computing import duty should be within the fiscal policy space because it relates to trade.
“The fiscal policy authorities are more in tune with the realities of business; thus, the FX rate for import duty is used to regulate trade flow and should be within their purview,” he advocated.
Yusuf called for a review of the 2023 Customs Act and quarterly hedging of the exchange rate at N1,000 or N1,100 to protect businesses.National secretary of the National Association of Government Approved Freight Forwarders, Kingsley Igwe, said the CBN should hedge or benchmark the FX rate for duty payment because the fluctuating rate is affecting investor confidence.
“The predictability of the cost of clearing in Nigeria is retrogressive due to the fluctuating FX rate for duty payment, which is not good for Nigeria’s logistics performance index rating,” Igwe said.
In the first quarter alone, a total of 28 rates were directed by the CBN for computing Customs duties, according to Wale Adeniyi, comptroller general of Customs.