July 14, 2022/CSL Research

A Punch news report stated that many Nigerian car dealers have resorted to diverting imported vehicles scheduled for Nigerian ports to other ports in neighbouring countries, such as Cotonou, before smuggling them into the country. The introduction of the new Vehicle Identification Number (VIN) valuation policy for imported vehicles in February, which was met with stiff resistance by auto dealers, freight forwarders and terminal operators, has continued to generate heated arguments among the stakeholders.

Among other issues trailing the VIN valuation policy, the clearing agents alleged that the Customs was using the policy to hike duties on imported vehicles arbitrarily. Beyond that, data and history surrounding some models of vehicles such as Mercedes M Class, Lexus with 17 digits and some brands of Toyota and BMW (known as non-standard vehicles) are yet to be captured by the Customs valuation portal, creating bottlenecks.

Based on a Customs document named Ex-Factory Price VIN-Valuation, published by BusinessDay, 2000 to 2013 models of Toyota Sienna are expected to pay N483,000; 2000 to 2013 models of Honda Accord are to pay N367,000 as import duty; 2000 to 2013 models of Lexus RX350 are to pay N674,000 and 2000 to 2013 models of Lexus ES350 are expected to pay N609,000 as import duty. Cars such as 2000 to 2013 models of Hyundai Accent are to pay N233,000; 2000 to 2013 models of Hyundai Elantra are to pay N292,000 while 2000 to 2013 models of Hyundai Santafe are to N399,000 as a duty.

Also, popular cars such as 2000 to 2013 models of Nissan Pathfinder are expected to pay N484, 000; 2000 to 2013 models of Toyota Corolla are to pay N290,000 as import duty; 2000 to 2013 models of Toyota Rav 4 are to pay N396,000; 2000 to 2013 models of Toyota Camry are to pay N336,000 as duty, while 2000 to 2013 models of Toyota Highlander are to pay N528,000 duty.

While we laud the government’s efforts at leveraging the use of technology to automate the valuation of vehicles coming into the country, we believe the government needs to do all
 within its power to ensure the equipment used is standard and up to date. The new valuation policy must eliminate all grey areas. Issues regarding benchmarking of import duty on cars taking depreciation into consideration and the age limit of cars entering the country should be thoroughly investigated and decided. That said, there is a clause in the Nigerian Finance bill that should drive down import duty on foreign vehicles from 35% to 5%.

This, according to the government, is to reduce the cost of transportation. The Nigerian consumer has been through another recession since the first recession in 2016 and has been stifled by high inflation and multiple devaluations, implying the inability of a majority to afford new cars and, much less, excessive import duties.