Nigeria’s Federal Government has announced a review of the Import Adjustment Tax (IAT) as part of the implementation of Economic Community of West African States (ECOWAS) Common External Tariff (CET) 2022-2026, raising tariffs on importation of 189 items including rice, wheat, and alcohol.
According to the revised 2023 document, importation of rice packing of more than 5kg or in bulk and in packing of 5kg or less will now attract 60 percent tariffs, up from 50 percent in the previous ECOWAS CET. Similarly, importation of wheat or meslin flour will attract 70 percent tariffs, up from 50 percent in the previous ECOWAS CET.
In a document titled ‘Revised Import Adjustment Tax (IAT) for Implementation of ECOWAS CET (2022-2026), 2023 fiscal policy measures,” the Minister of Finance, Zainab Ahmed, stated that President Buhari has approved the implementation of the 2023 fiscal measures, which include Supplementary Protection Measures (SPMs) for the enforcement of the ECOWAS CET 2022-2026, and revised excise duty rate on alcoholic beverages, cigarettes, and tobacco products, as well as the introduction of excise duty on Single Use Plastics (SUPs).
The Common External Tariff is one of the principal instruments for harmonizing ECOWAS member states and strengthening its common market. It is the application of the same customs duties, import quotas, and preferences by a group of countries in a customs union. The said import duties, quotas, and preferences are applicable to goods entering the region of the customs union irrespective of the country of first entry of the goods.
“The national list consisting of items with import duty reduction to promote and stimulate growth in critical sectors of the economy shall continue to form Chapter 99 in the ECOWAS Common External Tariff to be implemented by Nigeria. The concessionary import duty under the new Chapter 99 will only be accessible to verifiable investors/manufacturers who require them as inputs for production,” the memo stated.
A grace period of 90 days, commencing from May 1, 2023, will be granted to all importers who had opened Form ‘M’ and must have entered into irrevocable trade agreements before the coming into effect of this circular to process and clear their goods at the prevailing duty rates. However, any new import transaction entered from May 1, 2023, will be subjected to the new import duty regime.
“The revised excise duty rate on alcoholic beverages and tobacco products in line with the existing excise regime implementation period shall take effect from June 1, 2023, and reviewed upwards in line with the new regime by June 1, 2024. The excise duty on Single Use Plastics (SUP) shall also take effect from June 1, 2023,” the memo added.
The review of the Import Adjustment Tax is expected to generate more revenue for the country and encourage local production of the affected items.