How is Customs Duty Calculated in Nigeria | 360 AutoSecure

Understanding customs duty is crucial for anyone involved in importing goods into Nigeria.

Whether you’re a business owner, an importer, or just someone looking to bring in a personal item, knowing how customs duty is calculated can save you from unexpected expenses.

In the first half of 2024, the Nigeria Customs Service (NCS) collected a total revenue of ₦2,742,761,079,559.26, surpassing the half-year target by 8% and showing a significant increase of 127% compared to the same period in 2023

The successful implementation of the e-auction platform generated a total of ₦1,343,607,394.17 from January to June 2024. This initiative not only boosted revenue but also enhanced transparency and compliance in customs processes

In this comprehensive guide, we will explore the factors influencing customs duty in Nigeria, how it is computed, and the tools available to help you determine your payable duty.

 

What is Customs Duty?

 

Customs duty is a tax levied on goods imported into a country.

According to the World Bank, customs and other import duties accounted for a significant portion of Nigeria’s tax revenue.

It serves as a source of revenue for the government and helps protect local industries from foreign competition.

The introduction of a 90-day window for duty payment on uncustomed vehicles resulted in substantial revenue, amounting to ₦4,370,459,435.00

In Nigeria, the customs duty system is regulated by the Nigeria Customs Service (NCS) and is based on various factors such as the type of goods, their value, and applicable duty rates.

Nigeria had a total export of $63.42 billion and total imports of $60.67 billion, leading to a positive trade balance of $2.75 billion. The effectively applied tariff weighted average (customs duty) for Nigeria is 9.37%, and the Most Favored Nation (MFN) weighted average tariff is 9.45%

 

Factors Affecting Customs Duty Calculation

 

Several factors influence the computation of customs duty in Nigeria:

1. CIF Value (Cost, Insurance, and Freight): The total value of the goods, including the cost of purchase, shipping, and insurance.
2. HS Code (Harmonized System Code): A classification system that determines the duty rate applicable to specific goods.
3. Customs Duty Exchange Rate: The rate at which foreign currencies are converted to Naira for duty calculations.
4. Additional Levies and Taxes: These may include Value Added Tax (VAT), excise duties, and other charges.
5. Customs Duty Calculator: A tool used to estimate duty based on the above factors.

How is Customs Duty Calculated in Nigeria?

 

The Nigeria Customs Service follows a standardized approach to determine customs duty.

The general formula used is:

Customs Duty = CIF Value × Duty Rate

Where:

• CIF Value = Cost of Goods + Insurance + Freight
• Duty Rate = Percentage assigned based on the HS Code

For example, if you import goods worth $10,000 with an insurance cost of $500 and a freight cost of $1,000, the CIF value would be $11,500.

If the duty rate is 10%, the customs duty payable would be:

$11,500 × 10% = $1,150

This amount is then converted to Naira using the customs duty exchange rate set by the Central Bank of Nigeria (CBN) at the time of importation.

 

How Custom Duty is Calculated for Vehicles

 

This is how to calculate the customs duty of a vehicle in Nigeria. After watching this video, you will be able to determine whether cars are overpriced or not.

Customs duty consists of several charges, which include:

• Import duty (20%) of the value of the car.
• Levy (15%) of the value of the car.
• Surcharge (7%) of the import duty.
• ECOWAS Trade Liberalization (0.5%) of the value of the vehicle.
• VAT (7.5%) of the value.

Let’s do the math: If you purchase a car for $7,500, and the exchange rate is ₦1,500 per $1, the cost of the vehicle in Naira would be:

$7,500 × ₦1,500 = ₦11,250,000

Now, let’s calculate the customs duty:

• Car value: ₦11,250,000
• Import Duty (20%): ₦2,250,000
• Levy (15%): ₦1,687,500
• Surcharge (7%): ₦157,500
• ECOWAS Tax (0.5%): ₦56,250
• VAT (7.5%): ₦1,155,094

Total customs duty: ₦5,306,344

Final cost of the car: ₦16,556,344 (excluding shipping fees)

 

With this calculation, you can compare it with the market price of a similar vehicle in Nigeria to determine if it is overpriced.

Tools to Check Customs Duty Online

 

To make the calculation process easier, importers can use:

• Nigeria Custom Duty Calculator: An online tool that provides estimates based on input values.
• Customs Duty PDF: Documents published by NCS containing duty rates for various products.
• Current Custom Duty Rate: Available on the Nigeria Customs Service official website.

How to Check Custom Duty Online

 

To check customs duty on a product, follow these steps:

1. Visit the Nigeria Customs Service website.
2. Enter the HS Code of the product.
3. Input the CIF value.
4. Use the customs duty calculator for an estimate.
5. Review applicable levies and additional charges.

 

Custom Duty in Nigeria on Cars

 

Importing cars into Nigeria attracts a specific customs duty rate, which varies based on the model, year of manufacture, and engine capacity.

Typically, custom duty in Nigeria on cars includes:

• Import duty (ranging from 20% to 35%)
• VAT (7.5%)
• Other levies where applicable

How is Customs Duty Calculated in Nigeria – FAQs

 

1. What is the formula for calculating customs duty in Nigeria? Customs duty is calculated using the formula:
Customs Duty = CIF Value × Duty Rate
Where CIF (Cost, Insurance, and Freight) is the total value of the product, including the cost of purchase, insurance, and shipping fees.

2. How do I check customs duty online in Nigeria? You can check customs duty online by:

• Visiting the Nigeria Customs Service website.
• Entering the HS Code of the product.
• Using the Nigeria customs duty calculator to estimate charges.

3. What is the customs duty exchange rate? The customs duty exchange rate is the official rate at which foreign currencies are converted to Naira for import duty calculations. This rate is regularly updated by the Central Bank of Nigeria (CBN).

4. How much is customs duty on cars in Nigeria? Customs duty on cars includes:

• Import duty: 20%–35% of the car’s value.
• Levy: 15% of the car’s value (for certain vehicle categories).
• VAT: 7.5% of the car’s value.
• Additional charges like ECOWAS trade levy and surcharges may apply.

5. What is the Nigeria custom duty calculator? The Nigeria custom duty calculator is an online tool that helps importers estimate their payable customs duty based on the product type, CIF value, and applicable duty rates.

6. Can I get a customs duty PDF for reference? Yes, the Nigeria Customs Service provides PDFs with updated duty rates for various products, which can be accessed on their official website.

7. What is the current customs duty rate in Nigeria? The current customs duty rate varies based on the product category and government policies. You can check the latest rates on the Nigeria Customs Service website or use a customs duty calculator for an estimate.

8. Are there exemptions from customs duty in Nigeria? Certain goods, such as humanitarian aid, diplomatic shipments, and government-approved imports, may be exempt from customs duty. However, proper documentation is required to qualify for exemptions.

9. Can I pay customs duty in installments? No, customs duty must be paid in full before the release of imported goods by the Nigeria Customs Service.

10. What happens if I fail to pay customs duty? Failure to pay customs duty can lead to penalties, seizure of goods, or legal action by customs authorities.

Conclusion

 

Understanding customs duty in Nigeria is essential for smooth importation and avoiding unnecessary costs.

By using tools like the Nigeria custom duty calculator, keeping up with the customs duty exchange rate, and checking the current custom duty rate, importers can make informed decisions.

Having this knowledge ensures that you are well-prepared for all associated costs, preventing unexpected expenses that could disrupt your business or personal plans.

Staying updated with the latest customs duty regulations will also help you plan ahead and choose the most cost-effective strategies when importing goods into Nigeria.

Whether you are a business owner importing bulk products or an individual purchasing a vehicle, understanding the charges involved will help you negotiate better prices and avoid unnecessary markups.

The ability to calculate duties accurately gives you an advantage when dealing with customs officials, clearing agents, and vehicle dealers, ensuring transparency in all your transactions.

Need help calculating your customs duty?

Use our customs duty calculator today and ensure a hassle-free import process.

Visit 360 AutoSecure now for expert assistance!

By utilizing our tools and resources, you can make well-informed financial decisions and avoid overpaying on duties.

Don’t let hidden fees catch you off guard—calculate your duties now and import with confidence!