The Federal Executive Council (FEC) has approved a new 0.2% import levy on eligible imports from African Union (AU) Member States.
This decision by FEC is based on resolutions from the 2016 Kigali Summit, where African Leaders agreed to implement a 0.2% uniform levy on eligible imports into Member States. The levy is to enable Member States settle AU subscriptions on a sustainable basis.
The new levy would be calculated on the cost, insurance and freight (cif) values of the eligible goods. In this regard, eligible goods as contemplated by the AU, are expected to be all goods imported into Nigeria except the following:
- Goods originating from outside the territory of a Member State for home consumption in a Member State and re-exported to another Member State;
- Goods received as aid, gifts and non-repayable grants by a State or by legal entities constituted under public law and destined for charitable works recognized as being for the common good;
- Goods originating from non-Member States, imported as part of financing agreements with foreign partners, subject to a clause expressly exempting the said goods from any fiscal or para-fiscal levy;
- Goods which have been imported prior to commencement of the import levy. In Nigeria’s case, it is our understanding that this exemption shall apply to goods that have been ordered and under importation process before approval of the import levy;
- Goods on which the import levy has been previously paid.
The FGN has explained that the import levy would be used to settle AU subscriptions. Any excess revenue would be collected into a special account, which would be used to settle subscriptions to other multilateral organizations. The new import levy would only increase the already high cost of importing goods into Nigeria, which may impact the sourcing strategies of importers.