The Nigerian Presidential Committee on Fiscal Policy and Tax Reforms has recommended that the exchange rate for Customs import duty be set at N800 per dollar for the remainder of the year.
This recommendation aims to address the current erratic changes in Customs duty rates, which have fluctuated up to 40 times this year, with exchange rates varying between N900 and N1,700 per dollar.
Chairman of the committee, Taiwo Oyedele, a former partner at PwC Nigeria, announced this new direction while discussing the tax panel’s activities in Lagos. Oyedele emphasized that the volatility of the foreign exchange (FX) market and the frequent changes in the import duty rate by the Nigeria Customs Service (NCS) hinder businesses’ ability to plan adequately.
“When we did the budget, we said naira to dollar will be N800, now it is way more than N1,000. People need to plan. So now, we are saying to the government, can you please sign an order that says for the purpose of paying import duty, we shall use N800 for the rest of the year, till December. So, we have proposed N800,” Oyedele stated.
Currently, Customs adopts FX rates recommended by the Central Bank of Nigeria (CBN) for import duties based on official FX market trading activities. Analysts have criticized this approach, noting that it disrupts business planning. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), recommended setting a quarterly exchange rate between N800/$ and N1000/$ for import duties assessment.
In addition to the exchange rate proposal, Oyedele disclosed that the committee recommended consolidating over 100 different tax collection agencies at federal, state, and local levels into a central tax agency, the Nigerian Revenue Service. The committee also suggested implementing zero-based budgeting and introducing long-term appropriation to classify budget items under infrastructure, human capital investment, personnel cost and productivity, administrative overheads, debt service, and sinking funds.
