Navigating Policy Shifts: Implications of the Nigeria Customs Service's Suspension of the 4% FOB Import Charge


The Nigeria Customs Service (NCS) has announced the suspension of the 4% Free-on-Board (FOB) value charge on imports, as outlined in Section 18(1)(a) of the Nigeria Customs Service Act (NCSA) 2023. This decision comes amid ongoing consultations with the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and other key stakeholders. 

Background on the 4% FOB Charge

The 4% FOB charge is calculated based on the value of imported goods, including the cost of goods and transportation expenses up to the port of loading. Initially, the NCS implemented this charge in line with the provisions of the NCSA 2023 to drive effective operations. 

Stakeholder Concerns and Reactions

The introduction of the 4% charge faced significant pushback from various stakeholders. The Lagos Chamber of Commerce and Industry (LCCI) criticized the sudden implementation, highlighting the lack of prior consultation and the additional burden on businesses already grappling with multiple taxes, high interest rates, forex scarcity, and inflation. The LCCI urged the government to suspend the charge and engage in structured sensitization processes before any implementation. 

Reasons for Suspension

The suspension aligns with the expiration of contract agreements with service providers, including Webb Fontaine, which were previously funded through the 1% Comprehensive Import Supervision Scheme (CISS). This juncture presents an opportunity for the NCS to review its revenue framework comprehensively. The previous funding arrangement, which separated the 1% CISS and 7% cost of collection, led to operational inefficiencies and funding gaps in customs modernization efforts. The new Act aims to address these challenges by consolidating "not less than 4% of the Free-on-Board value of imports," ensuring sustainable funding for critical customs operations and modernization initiatives. 

Future Steps

During the suspension period, the NCS plans to engage in further consultations with stakeholders to ensure that the implementation strategies align with the Act's provisions for sustainable financing of modernization initiatives. The service remains committed to transparency, fair trade practices, and efficient revenue management. 

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