Import bills on used vehicles, with diesel or semi diesel engine, of cylinder capacity less than 2.5 liters rose sharply Year-on-Year (YoY) by 375 percent to N803.4 billion in the first half of 2023 (H1’23 from N169.1 billion in the corresponding period of 2022, H1’22.
Data from the National Bureau of Statistics (NBS) Foreign Trade in Goods Statistics also showed that import bills on used vehicles increased quarter-on-quarter (QoQ) by 956 percent to N733.9 billion in the second quarter of 2023(Q2’23) from N69.49 billion in Q1’23.
However, the data also showed a 43 percent YoY decline in import bills on motorcycles to N69.85 billion in H1’23 from N122.39 billion in H1’22.
Similarly, import bills on motorcycles fell QoQ by 19 percent to N31.3 billion in Q2’23 from N38.6 billion in Q1’23.
Recall that in April last year, the Nigeria Customs Service (NCS), in a statement signed by its National Spokesman, Timi Bomodi, confirmed the reduction of import duty on used and new imported vehicles from 35 per cent to 20 per cent.
However, in April 2023, the federal government, through the Federal Ministry of Finance, Budget, and National Planning, sent a circular to all Ministries, Departments, and Agencies introducing a new set of taxes on imported vehicles.
According to the new tax law which kicked off on June 1st, 2023, imported vehicles with engines ranging from 2.0 litres to 3.9 litres, will be subject to an additional tax known as Import Adjustment Tax (IAT), which is levied at a rate of 2 per cent of the vehicle’s value for engines ranging in size from 4.0 litres and above.
The new charge is in addition to the 35 percent import duty and 35 per cent levy that car importers already pay. In July 2023, Mr. Dele Alake, Special Adviser to the President on Special Duties, Communication and Strategy, announced that the Federal Government has suspended the import adjustment tax (IAT) imposed on certain vehicles.