HOW MUCH WILL I PAY AS CUSTOMS DUTY IF I IMPORT THIS?

"How much will I pay as Customs duty?" is one of the most frequently asked questions asked by potential importers and already importing clients. The amount to be paid as customs duty helps investors in short term and long term planning of business ventures.

Here, we are going to show you how to calculate or at least know the estimate of your customs duty.

Calcultating customs duty

1)      First, you have to know the cost of the goods [freight on board (FOB)] you want to import into the country. For example US$40,000.   

2)      You have to know the cost of shipment (freight) from the country of supply into our own country. Say US$2,000.

3)      Add the cost of the goods and the cost of shipment (freight) to get the total cost and freight (TOTAL C & F). So we have US$40,000 + US$2,000 = US$42,000

4)      Multiply the TOTAL C & F by the current interbank exchange rate (NGN305) to get the TOTAL C & F in naira. Total C & F is equivalent to CIF (US$42,000 X 305 = 12,810,000). So we have a CIF value of NGN12,810,000

Note: Nigeria customs service (NCS) has placed customs duty percentages most importable items. These customs duty percentages can be 5%, 10%, 20% etc. Also some of the importable items are VATable (i.e. they pay Value Added Tax). 

Scenario

Mr Obinna Adekoye Musa wants to import a 40ft container filled with new automobile spare parts. The FOB (cost of the goods) is USD40,000 while the CIF value is NGN12,810,000. The said good pays a 10% customs duty and a VAT of 5%. Calculate the total Customs duty to be paid by Mr Obinna Adekoye Musa.

Answer

First, you list out the laid down formula for customs duty calculation on a 10% duty and 5% VAT item

Surface duty (10% of the CIF)                       10% X NGN12,810,000 =      NGN1,281,000

Surcharge (7% of surface duty)                      7% X NGN1,281,000 =          NGN89,670   

ETLS levy (0.5% of CIF)                               0.5% X NGN12,810,000=      NGN64,050

CISS fee (1% of FOB)                                   1% X 40,000 X305=               NGN122,000

VAT (5% on all above + CIF)                        5% X (addition of all above) + (5%of CIF)

                                                                        (5% X 1,556,720) + (5% X 12,810,000)

                                                                        77,836        +         640,500 =  NGN718,336

TOTAL DUTY PAYABLE = NGN1,281,000 + NGN89,670 + NGN64,050 + NGN122,000 + NGN718,336

    = NGN2,275,056

Therefore, Mr Obi Adekoye Musa will pay a total customs duty of NGN2,276,056 for such importation

(Nota bene: this is a straightforward calculation. The exact amount to be paid may differ with NGN5000 NGN10,000 based on Customs assessment)

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