The Presidential Committee on Fiscal Policy and Tax Reforms has recommended an exchange rate of N800 per dollar Customs import duty rate for the rest of the year.
This move will be a huge departure from what is currently where Customs duty is changed erratically, sometimes twice a day with total changes effected so far this year at about 40 times.
Also, the value has followed the sharp swings in the exchange rate on the foreign exchange market with a wide range of between N900 and N1,700 to one US Dollar this year alone, a situation that has attracted widespread condemnation across business sectors.
Chairman of the committee, Taiwo Oyedele, disclosed the new direction, yesterday while speaking on the activities of the tax panel in Lagos.
The tax expert, a former partner at PwC Nigeria, said that the frequent changes in the import duty rate adopted by the Nigeria Customs Service (NCS) due to the volatility of the foreign exchange (FX) market do not allow for adequate planning by businesses.
His words: “When we did the budget, we said naira to the dollar would be N800, now it is way more than N1,000. People need to plan.
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“So now, we are saying to the government, can you please sign an order that says for the purpose of paying import duty, we shall use N800 for the rest of the year, till December. So, we have proposed N800.”
Customs typically adopt FX rates recommended by the Central Bank of Nigeria (CBN) for import duties based on trading activities in the official FX market.
Many analysts have criticized this approach, noting that it is bad for businesses as it puts business planning in disarray.
As a way out, Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), had recommended that the Customs should set a quarterly exchange rate between N800/$ and N1000/$ for import duties assessment.
Meanwhile, Oloyede said the committee has also recommended that the over 100 different tax collection agencies at the federal, state, and local council levels in the country be collapsed into a central tax agency, known as the Nigerian Revenue Service.
The committee, Oyedele further said, also recommended implementing zero-based budgeting, and introducing long-term appropriation.
“The budget must be restructured to classify items under infrastructure, human capital investment, personnel cost and productivity, administrative overheads, debt service and sinking funds,” he said.
