CBN Overhauls Foreign Exchange Rate Formula for Customs Duty Assessment

The Central Bank of Nigeria (CBN) has revised its formula for determining foreign exchange rates for customs duty on imports, aiming to address concerns over irregular changes in import duty assessment levies. Dr. Hassan Mohammed, Director of the Trade and Exchange Department at the CBN, announced this in a memo to the Nigeria Customs Service (NCS) and the general public in Abuja.

The CBN has observed that the fluctuating import duty assessment levies by the NCS are causing uncertainties in the pricing structure of goods and services, leading to abnormal increases in final sale prices driven by uncertainty rather than market fundamentals. To tackle this issue, the CBN advises that the closing foreign exchange rate on the date of opening Form M for importation should be used for Import Duty Assessment. This rate will remain valid until the termination date of the importation and clearance of goods.

By adopting the closing FX rate on the date of opening Form M, the NCS and importers can plan effectively and reduce uncertainties caused by daily exchange rate fluctuations. This new approach, effective from February 26, replaces the requirements of Memorandum 9 of the CBN Foreign Exchange Manual. The CBN acknowledges the initial volatility and price distortions following the liberalisation of the FX market but is confident that these reforms will stabilize the market and boost confidence.

The NCS had adjusted its FX rate for tariffs and duty collection to N1,413 to the dollar on February 3, following an earlier adjustment from N951 to N1,356 to the dollar on February 2. The frequent review of customs exchange rates had raised concerns among Nigeria’s business community.

Peoples Gazette