After losing huge amount of money, the Federal Government resolved to reduce the widening gap in granting waivers to companies and individuals, BAYO AKOMOLAFE report
In the last two decades, the Federal Government has lost huge amount of money to import waivers granted to some influential Nigerians and firms to import vegetable oil, textile, rice, crude palm oil, power equipment, steel among others.
Across the world, import duty waivers, exemptions, and concessions are used by governments to protect local businesses and jobs as they are vehicles to meet specific economic goals, especially in protecting local industries, creating jobs, and promoting exports.
In Nigeria, the statutory basis for the exemptions is provided in Parts A and B of the third schedule of the Customs, Excise and Preventive Service (Management) (Duties, Rates and Other Taxes) Act, 1994 (Act 476).
Based on this, importers of rice, palm oil, energy equipment, textile machinery, steel and vegetable oil were the most beneficiaries, leading to loss of revenue to private hands.
Major problems
Waivers and concessions were lost through the 2.5 per cent duty on textile machinery and their spare parts, Negotiable Duty Credit Certificate (NDCC), 2.5 per cent duty and VAT free on industrial machinery and port, concession on clearance of goods imported without Clean Report of Inspection of the 50 per cent assessed goods instead of 50 per cent of the assessed Freight On Board value (FOB) and the ECOWAS Trade Liberalisation Scheme Comprehensive Import Scheme (CIS), and Export Expansion Grant.
Last week, the customs Comptroller General, Adewale Adeniyi, noted that significant concessions were granted to support various sectors of the economy, adding that ₦1.68 trillion was granted in 2024.
He said: “These concessions comprised ₦723,000,081,776.68 in import duty waivers, ₦372,649,650,951.72 in other levy concessions and ₦586,652,916,152.27 in import VAT relief.
“These strategic concessions were granted to stimulate economic growth, support industrial development and enhance the overall business environment in line with government policy objectives.
Notably, the 2024 concession value represents a significant reduction from the ₦3,959,868,268,993.18 recorded in 2023.”
According to him, this reduction was a direct result of Customs enhanced monitoring mechanisms and strategic reforms aimed at blocking loopholes and eliminating abuses in the concession granting process, ensuring that only genuine and qualifying enterprises benefit from these incentives.
For instance, in 2023, the Federal Government lost N1.3 trillion in 2023 due to waivers and concessions granted to investors by ex-President Muhammadu Buhari’s administration.
Also, a total of N3.3 trillion duty exceptions was granted to importers between 2019 and 2021. Meanwhile, the Senator Sani Musa-led Joint Committee scrutinising the 2024-2026 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) had frowned at the alleged loss of N1.3 trillion to waivers and concessions in 2023 by the Federal Government when the comptroller general appeared before the committee in Abuja.
Nevertheless, Adeniyi, who was represented at the session by the Deputy Comptroller General, Mba Musa, explained that NCS would have generated more revenue to the nation’s Consolidated Revenue Fund (CRF) in 2023 if not because of the waivers and concessions arrangement.
Notwithstanding, the chairman of the joint committee said that the Senate would commence an investigation into granting waivers and concessions in the country. He said: “By now, we should not be talking about concession for cement manufacturers,
Government should block loopholes in the concession being granted by ensuring that only genuine and qualifying enterprises benefit from the incentives
we should not even be talking about sugar importation. We should not deny ourselves revenues that we should generate to make our economy vibrant. By now, we should be consolidating on waivers given to boost revenues.”
Moreover, in a report contained in the Federal Government’s 2022 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper, it was revealed that government gave out N3.3 trillion duty exceptions to importers in between 2019 and 2021.
The exemptions, which included Value Added Tax relief granted on imports, waivers and concessions on import duties, ECOWAS Trade Liberalisation Scheme, surcharges, Comprehensive Import Supervision Scheme (CISS), excise and levies is 194.65 per cent more than the N779.74 billion waivers granted in 2020 and N213.1 billion in 2019.
A breakdown of the aggregate Customs’ exemption showed waivers on import duties were valued at N435.85 billion, surcharge (7 per cent of import duty) was N30.38 billion, while Common External Tariff levy was N1.42 trillion.
Also, CISS was valued at N130.04 billion; ECOWAS Trade Liberalisation Scheme, N72.91billion; iron levy, N115,879; National Automotive Council (NAC) levy, N41.39 million and VAT (import VAT), N208.24 billion.
The report revealed that the highest jump in aggregate Customs exemptions was in the Common External Tariff (CET) levy, which jumped from N223.99 billion in 2020 to N1.42 trillion in 2021.
The report said: “The exemption applied to imported goods covered by diplomatic privileges, military hardwares, fuels and lubricants, hospital and surgical equipment, aircraft (their parts and ancillary equipment), plant and machinery imported for use by companies in export processing zones, health and medical supplies.”
The report further revealed that petroleum products (fuels and lubricants) accounted for 46 per cent of the N216.88 billion import duty waiver granted.
Losses
For instance, in 2014, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, declared that the country lost N797.8 billion between 2011 and May 2014 to import waivers and tax holiday concessions.
Also, statistics revealed that the Federal Government lost over N490 billion between January, 2000 and 2008 to waivers.
In a data by the Nigeria Customs Service (NCS), in 2003, N12.4 billion was lost to waivers; 2004,N55.8 billion; 2005, N71.244 billion; 2006, N54.921 billion; 2007, N42.598 billion)l; January and March, 2008, N9.512billion; 2010, N104.05 billion), 2011, N78.49 billion; 2012, N128.54 billion; 2013, N46.06 billion and 2014, N136.48 billion.
Also, it was alleged that import duty waivers of N165 billion were granted by the former President, Chief Olusegun Obasanjo to 1,843 beneficiaries in 2007 alone.
Last line
Government should block loopholes in the concession being granted by ensuring that only genuine and qualifying enterprises benefit from the incentives.
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