The Nigeria Customs Service (NCS) has been instructed to commence the implementation of a zero per cent import duty and Value-Added Tax (VAT) exemption on essential food items, This significant policy shift follows President Bola Tinubu’s approval and is aimed at addressing the high cost of basic foodstuffs in Nigeria.
The Ministry of Finance officially communicated this directive in a letter to the NCS dated August 8, 2024. In addition, the NCS confirmed the development through a document shared with one of its correspondents on Wednesday. This directive marks a crucial step in the government’s strategy to alleviate inflationary pressures on food prices.
In his response to the directive, NCS Comptroller-General Bashir Adeniyi has instructed officials within the service to begin the necessary enforcement measures. The NCS issued a circular titled “Approval for the Implementation of Zero Per Cent Duty Rate on Basic Food Items,” which detailed the Ministry of Finance’s notification of the president’s approval.
The circular, dated August 14, 2024, and signed by Deputy Comptroller-General C.K. Niagwan, specifies that the policy applies to several key food commodities, including maize, husked brown rice, wheat, beans, and millet. This exemption is effective from July 15, 2024, through December 31, 2024, and is limited to these particular items.
The letter further clarifies that the zero per cent duty rate and VAT exemption policy is restricted to importers who meet specific criteria. These criteria include having milling capacity and a verifiable Backward Integration Programme (BIP), which involves sourcing raw materials locally to reduce reliance on foreign imports. This restriction is intended to support domestic production and processing capabilities.
During the implementation period, the Ministry of Finance will provide the NCS with a list of approved importers and their respective quotas. This measure is designed to ensure that the importation of the exempted food items is conducted in an orderly manner and within the stipulated guidelines. The Ministry has also called for wide dissemination of this information to guarantee strict adherence to the new policy.
This policy change comes in the wake of the Federal Government’s announcement on July 10, 2024, regarding the suspension of duties, tariffs, and taxes on food staples imported through land and sea borders. The suspension aims to mitigate the impact of inflation on food prices, which has been a significant concern for many Nigerians. On August 7, 2024, the NCS announced that the duty waiver on imported foods would be implemented within the following week.
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Finance Minister Wale Edun, in an earlier communication, outlined that the measure is designed to alleviate the high cost of food items in Nigeria by targeting the national supply gap. The revised duty rates include a reduction from 30 per cent to zero for husked brown rice, from five per cent to zero for grain sorghum, millet, and maize, and the complete removal of the 20 per cent duty levy on wheat and beans.
Minister Edun emphasized that the policy is intended to address the high cost of food and would be limited to the extent necessary to fill the national supply gap, as determined by a committee established for this purpose. Importers seeking to benefit from this duty waiver must demonstrate milling capacity and a verifiable BIP, which aims to promote local sourcing of raw materials and reduce dependence on foreign supplies.
On Tuesday, Comptroller-General Adeniyi projected that the government could forgo approximately N188 billion in revenue due to the suspension of import duties on these food commodities. Despite the potential revenue loss, Adeniyi assured that the NCS is committed to ensuring the effective implementation of the policy. Special corridors will be established to facilitate the clearance of food imports, thereby streamlining the process and ensuring that the policy achieves its intended outcomes.
