Vehicles, parts prices to surge as customs begins 4% FOB levy

Prices of imported goods, such as vehicles and spare parts, are expected to surge as the Nigeria Customs Service officially commences the collection of a new four percent Free On Board levy on all imports. The levy, which took effect Monday, replaced the one per cent Comprehensive Import Supervision Scheme charge, calculated based on the value of imported goods, including transportation costs to the port of origin. Car dealers, already grappling with high import duties and a volatile naira, are expected to be among the worst hit. For instance, a vehicle valued at ₦20 million (including transportation to port) will now attract an additional ₦800,000 in FOB levy, up from ₦200,000 previously charged under the CISS framework. This is in addition to the 35 per cent duty, 10 per cent levy, and VAT already paid on imported vehicles.
For importers of vehicles and auto dealerships that operate on lean margins, this cost increase could lead to significant price hikes or a reduction in the volume of vehicles imported into the country. The customs had earlier announced that the new levy was enshrined in the Customs Act 2023 and would serve as a major funding source for its operations, including the deployment of the B’Odogwu cargo clearance system.  NCS’s comptroller-general, Adewale Adeniyi, said the transition from the CISS to the FOB levy was aimed at modernising the service and reducing clearance bottlenecks. “The one per cent CISS has served the country for decades,” Mr Adeniyi said at a recent stakeholder forum in Lagos. But as we embrace digitisation and indigenous technology like the B’Odogwu platform, the Customs must find sustainable ways to fund these transformations.” Mr Adeniyi said the new levy would boost efficiency in port operations and help reduce human interference during clearance procedures. For manufacturers, freight forwarders, and vehicle importers, the major concern is the timing and compounded effect of the levy amid a depreciating naira, high inflation, and weak consumer demand. 
The Manufacturers Association of Nigeria had in February warned that imposing the FOB levy would have an adverse effect on the economy, especially for small and medium enterprises that rely on imported raw materials
Yet, industry analyst and former president of the National Association of Government Approved Freight Forwarders, Eugene Nweke, noted that the new levy has a clear legal basis in the Customs Act 2023, specifically under Part V, Section 18. The act mandates the NCS to operate dedicated government-approved bank accounts into which “not less than 4% of the FOB value of imports, user fees, budgetary allocations, and grants” should be paid. Mr Nweke said that the law not only authorises the FOB levy but also empowers the customs board to adjust the rate, subject to approval by the president and the National Assembly, in line with economic realities. While the act supports transparency and accountability in determining tariff regimes and user fees, according to Mr Nweke, its real-time implementation must be matched with stakeholder engagement and public communication.