CBN rolls out guidelines on new automotive policy

In line with the new automotive policy of the Federal Government, the Central Bank of Nigeria (CBN) has issued new fiscal policy measures to regulate the operations of authorized motor dealers in the country.
The CBN, in a memo dated January 20 from its trade and exchange department to all authorized dealers and the general public, spelt out new tariff for all categories of motor vehicles and tyres imported into the country.
The new measures, which take effect from October 9, 2013, stipulates that all e-forms ‘M’ and letters of credit, LCs, for certain brands of imported motor vehicles must be established and the last shipment date evidenced by the bills of lading on or before January 10.
The affected vehicle types include fully built unit, FBU, cars falling under H.S. Common External Tariff, CET, code 87.03, which are to attract 35 per cent charge each for duty and levy. They previously attracted 20 per cent duty and 5 per cent value added tax, VAT.
Under the new arrangement, FBU commercial vehicles under the H.S. CET codes 87.01, 87.02, 87.05, 87.06, 87.07, and 87.16, which hitherto attracted a duty of between 5 and 10 per cent and 5 per cent VAT, would henceforth attract 35 per cent duty without levy.
Also affected are local assembly plants, whose owners would be expected to import their completely knocked down, CKD, parts at zero per cent duty, while semi-knocked down, SKD, ones, with H.S. CET code 87.06, which attracted 10 per cent duty and 5 per cent VAT, would now attract 5 per cent duty only.
But, local assembly plant owners willing to import FBU cars are expected to do so at 35 per cent duty charge without levy, while commercial vehicles would attract 20 per cent duty without levy in numbers equal to twice their imported CKD/SKD kits.
To ensure the revival of the country’s tyre industry, the memo signed by the Director of Trade and Exchange Department, Batari Musa, also spelt out harmonized duty payable on tyres by the dealers.
Pneumatic car tyres with H.S. CET code 4011.1000.00 would now attract 20 per cent duty, in addition to 5 per cent VAT, as against 20 per cent duty and levy and 5 per cent VAT previously.
Similarly, lorry/bus pneumatic tyres used for cars and lorries, with H.S. CET code 4011.2000.00, which used to attract 10 per cent duty and 5 per cent VAT, now attract 20 per cent and 5 per cent.
Importation of machinery and equipment for tyre production is now duty free, while all tyre manufacturing plants now get pioneer status.
Local tyre manufacturing plants are to import tyres at 5 per cent in numbers equal to twice their production for two years from the date of commencement of production.
To control under-declaration of vehicles value in order to cut down on duty, the Nigeria Customs Service, NCS, has been directed to publish the price of new vehicles annually for the interest of members of the public.
To provide a transparent benchmark for determining the value of used vehicles, the NCS is expected to use the value of a new vehicle depreciated by 10 per cent per annum, implying 10 years period for cars, and 7 per cent per annum, implying a 15 year period for commercial vehicles.
In either case, depreciation is expected not to be below 30 per cent of the value of the new vehicle equivalent.
To effectively combat smuggling, the CBN said monitoring and control of used and grey vehicles imports by all vehicle dealers and importers for sale to the public shall henceforth be licensed by the National Automotive Council of Nigeria, NACN, to facilitate the resolution of consumer complaints