Through a circular, the Minister of Finance, Mrs. Kemi Adeosun, said the move was in line with the provisions of the Economic Community of West African States’ Common External Tariff (CET).
The approval was given by President Muhammadu Buhari as part of the fiscal policy measures of the Federal Government for the country to boost the economy.
The ECOWAS CET, which will cover the 2017 to 2019 fiscal periods, is composed of three categories made up of an Import Adjustment Tax list of 173 tariff lines, a national list consisting of 91 items and an import prohibition list, which is applicable to certain goods originating from non-ECOWAS member states.
“This is to confirm that His Excellency, Mr. President, has approved the 2016 fiscal policy measures made up of the supplementary protection measures for implementation together with the ECOWAS CET 2015-2019 with effect from 17th of October, 2016.
“Consequently, all transactions prior to the effective date of this circular shall be subjected to the tariff rates applicable before the coming into effect of this 2016 fiscal policy measures.”
A number of imported food industry related products had the tax rate decreased in the new directive, providing a critical reprieve to importers of such products, who have faced higher costs related to a devalued local currency Naira and a shortage of forex in the country.
The items include milk and cream; tea; fats of sheep or goat; malt extract; tomatoes prepared or preserved by vinegar; prepared glues and adhesives; synthetic organic colouring matter; denatured ethyl alcohol for medical, pharmaceutical or scientific purpose, whose import duties were reduced from 10 per cent to five per cent.
The government also approved a reduction of the applicable tax rate from 10 per cent to five per cent for tubes, pipes, hoses, sheets, foil, tape, polyethylene, paper and paper board.
A reduction on import tax on packaging will bode well for the food industry, which has seen a huge rise in the cost of packaging since the economic recession hit the country in 2016.
The circular also approved a zero per cent import duty for machineries and equipment used in sectors such as agriculture, cement, hospitality, power, iron and steel, solid minerals, textile and aviation. Before the approval, the import duties for machinery and equipment used in these sectors were set at five per cent.
However, the circular also reinforced the ban placed on the importation of some items, including refined vegetable oil, cocoa butter, spaghetti/noodles, fruit juice in retail packs, corrugated paper and paper boards, water, and liquid dietary supplements.