Why FG shifts implementation of 70% tariff on used vehicles to April

The Federal Government has moved the commencement date for the implementation of the 35 percent levy on imported used vehicles to April 30, 2015, supposed to begin on January 1, 2015.

The commencement of the 35 percent levy was to add-up to the already existing 35 percent duty, which will raise the total tariff collected by Nigeria Customs Service (NCS) on imported used vehicles to 70 percent. The tariff implementation date was formerly shifted from July 1, 2014, when the government commenced the implementation of the 35 percent to January 1, 2015.

Findings reveal that the delay in the commencement is to enable local vehicle assembly plants to stabilise their production in order to meet the nation’s demand for brand new vehicles.

According to a recent media statement issued by the National Automotive Council (NAC), the recent shift in the implementation date is due to the delay in the establishment of the proposed vehicle finance scheme.

Aminu Jalal, director-general of NAC, attributes the delay in establishing the vehicle finance scheme to the outbreak of Ebola Virus Disease. This, he says, resulted to the staff of the collaborating bank, Wesbank of South Africa, to delay their planned trip to Nigeria aimed at starting up their operations in September 2014.

“However, the new date for the start of operations of the financing scheme is now April 2015. Therefore, the Minister of Finance has been directed to extend the levy deferment on used cars to April 30, 2015,” according to the statement.

Jalal, who states that Nigeria’s vehicle market is about 400,000 units annually, with about 300,000 being imported as used cars, also discloses that government had introduced measures to balance the vehicle supply and make them affordable, with the production by the local assembly plants.

At the commencement of the auto policy, the assembly plants would be allowed to import two Fully Built Unit of cars on concessionary duty for every one Completely Knocked Down (CKD) or Semi-Knocked Down (SKD) car imported by the assembly plant in 2014/15. It will be one to one in 2016/17.