The Federal Ministry of Finance recently announced revised fiscal policy measures in the Automotive and Tyre Industries.
These measures seek to achieve the following:
- Fast track industrialization in the country
- Reduce foreign exchange demands by importers of vehicles
- Create more jobs in the country
- Commence the process of production and exportation of auto parts to other parts of the world
- Attract foreign equipment manufacturers to the country as well as sustain existing automotive assembly plants.
Consequently, the directive will pave the way for a new regime of revised tariffs on imported used (tokunbo) vehicles, brand new vehicles and tyres. These tariffs however exempt all existing transactions for which the Form M and Letter of Credit were opened and established on or before October 9, 2013. Kindly note that the last shipment date for these transactions should be on or before January 10, 2014.
Highlights of the Fiscal Policy measures are as follows:
- Fully Built Unit (FBU) cars shall attract a duty of 35% and 35% levy.
- Fully Built Unit (FBU) commercial vehicles shall attract a duty of 35% without levy.
- Local Assembly Plants shall import theirs:
ï¿½ Completely knocked down (CKD) at 0% duty
ï¿½ Semi-Knocked Down (SKD) at 5% duty
ï¿½ Fully Built Unit (FBU) cars at 35% duty and commercial vehicles at 20% duty without levy respectively in numbers equal to twice their imported CKD/SKD kits.
4. Car, Lorry/Bus tyres shall attract a duty of 20% and 5% VAT.
5. Importation of machinery and equipment for tyre production is now duty free.
6. Local tyre manufacturing plants are to import tyres at 5% duty in numbers equal to twice their production for two years from the date of commencement of production.
Subsequently, the Nigeria Customs Service (NCS) shall carry out the following actions to prevent under declaration of vehicle value by importers who are keen on reducing the applicable duty:
- Publish the price of new vehicles annually.
- Provide a transparent benchmark to determine the value of used (Tokunbo) vehicles.
This will be achieved via the application of depreciation indices on the value of new vehicles; however, the final depreciation assessment shall not be below 30% of the value of the new vehicle equivalent.
All vehicle dealers and importers of vehicles for sale to the public shall be licensed by the National Automotive Council of Nigeria.
Please note for your information and guidance.