Since the Central Bank of Nigeria introduced floated the Naira via its Flexible Exchange Rate Policy, the exchange rate between the Naira and the Dollar has plummeted from about N197 to N282 to the dollar. The depreciation of the currency as we have explained in Nairametrics is expected to increase the prices of goods and services across board. This affects services provided both at the private and public sector.
One specific area where we expected an immediate impact was the exchange rate that will be used by importers to pay for import duties. The Nigerian Customs Service usually charges its duties on imported items using the official exchange rate reported by the CBN. With the official peg now removed, we had expected a new rate policy from the customs service.
Officials of The Nigerian Customs Service, have now explained how this will work as reported by several newspapers. Here is what we’ve learnt.
- All import duties will now be calculated based on the exchange rate at the time of placing import order.
- If the value of goods imported are shown in a foreign currency, the duty you pay in Naira will be converted from dollar to the equivalent in Naira using the exchange rate at the time of making declaration to Customs.
- So, if for example your application to clear your import was submitted on Monday the 4th of July, you will be charged the prevailing exchange rate of N282/$1
- The stronger the Naira is at the date your import arrives, the less you pay in terms of custom duties.
- The weaker the Naira is at the date your import arrives, the more you pay in terms of custom duties.
- This rate change commenced on July 1, 2016
- Any further changes will be in line with the official exchange rate