Nigeria’s Customs Pledges To Generate N3.019Trn in 2022

The Nigeria Customs Service (NCS) assured Senate members yesterday that it would generate N3.019 trillion in revenue for the Federation Account this year.

This comes as the Nigerian House of Representatives directed the Central Bank of Nigeria (CBN) and the Nigerian Customs Service (NCS) to align their positions on the electronic invoice policy and report back to the House on March 17, 2022, for further action.

Colonel Hameed Ali (retd.), the NCS Comptroller General, gave the assurance when he testified before the Senate Committee on Customs, Excise, and Tariff.

The NCS targets, according to Ali, were N2.019 trillion from the Federation, N253.23 billion from non-federation, and N746.96 billion from import Value Added Tax (VAT).
The National Assembly set a revenue target of N1.465 trillion for the federal government’s revenue-generating agencies this year.

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The Customs boss, who appeared before a Senate panel to present and defend the NCS’s 2022 Budget, said the revenue target for 2022 was N965.42 billion, or 31.98 percent, higher than the revenue target for 2021.
According to Ali, the Service proposed a budget expenditure of N369.14 billion for the fiscal year 2022, which would be funded by a 7% cost of collection estimate of N151.84 billion.
He also stated that the agency hoped to earn N60.12 billion, with 60% CISS.

NCS’s 2% VAT share would amount to N14 94 billion, he said, while the retained income would be N114.3 billion. He estimated that the agency’s portion of the excess target for 2021 is N27.85 billion.

For the fiscal year 2021, the NCS proposed a budget expenditure of N242.45 billion.
Ali explained that the expected income included N108.85 billion in personnel costs, or 29.49 percent, and N45.89 billion in overhead costs, or 12.43 percent.

He also stated that the agency proposed a capital cost of N214.30 billion, or 58.08 percent, with a total cost of N369.04 billion, or 100.00 percent.

When asked if the revenue target could be increased beyond N3.1 trillion, the NCS boss cautioned against overly ambitious targets, noting that the one set for 2022 was already on the high side, in order to avoid crippling the economy.

Senator Francis Alimikhena, Chairman of the Senate Committee on Customs, Excise, and Tariffs, took a swipe at the Customs’ continued complaints about scanners that don’t work. He warned that the excuses must be addressed immediately in order to boost the country’s revenue drive, and that national assets must not be allowed to deteriorate.

Alimikhena urged the NCS chief to ensure that the revenue-generating agency’s 2023 budget is submitted to the National Assembly by the end of October 2022.
He claimed that by doing so, his panel would be able to expedite the bill’s passage before the end of December 2022.
“The Nigeria budget cycle runs from January to December,” he added. Customs should be aware of this circle; late budget submissions will no longer be accepted. The budget for 2023 should arrive in the National Assembly by the end of October 2022, allowing for quick passage before the end of December 2022.

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A House committee is urging the CBN and Customs to harmonize their e-invoice policies.

The CBN and the NCS have been directed by the House of Representatives to harmonize their positions on the electronic invoice policy.
During a meeting with both agencies and other stakeholders yesterday to address issues arising from the CBN’s introduction of the new system, the lawmakers gave the directive through their Committees on Customs and Excise as well as Banking and Currency.

The CBN had announced that the new system would begin on February 1, 2022, but the House had announced its suspension on January 27, 2022, and directed the apex bank to adopt a 90-day timeline for policy implementation in order to avoid destabilizing the economy.

The resolutions were passed in response to a motion made by Chairman of the Committee on Customs and Excise, Leke Abejide. During the meeting, Abejide stated that the policy would be suspended until the matter was resolved.
Dr. Ozoemena Nnaji, the CBN’s Director of Trade and Exchange, said the new system was “seamless” and “integrated with the import and export process in a way that does not impede any of the stakeholders.”

She said the price of goods involved in a trade transaction was sometimes manipulated by those looking to launder money through the financial system, and that some regulators suggested that banks implement a price check on all trade transactions as a simple way to identify such activities.

This, she explained, was the goal of the new system, which the CBN implemented in collaboration with other MDAs.
“This would be one way of ensuring that the money we earn in trade reaches us without incurring foreign exchange or duty losses.” “Our main goal is to ensure that we allocate our limited foreign exchange resources to imports and that we collect export duties and transaction values due to us at market rates,” she explained.

She said a 2014 analysis of trade invoicing in Nigeria revealed a potential revenue loss to the government of $2.2 billion for the year, which she said represented 4% of total annual government revenue as reported by the IMF and 15% of the country’s total trade.

The new CBN policy, according to Assistant Controller General of Customs Galadima Saidu, is a violation of the World Trade Organization Trade Facilitation Agreement, which Nigeria is a signatory to.

He claimed that using benchmarking in valuation would defeat the purpose of the Customs valuation agreement, causing delays and uncertainty.

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He claims that the use of benchmarking in valuation has been phased out due to the dynamic nature of pricing, particularly in this time of rapid technological advancement.

“Nigeria is a signatory to the World Trade Organization’s (WTO) trade facilitation agreement. The agreements are legally binding and include sanctions that would harm the Nigerian economy.

“The CBN initiative is in violation of Article 7 of the General Agreement on Tariff and Trade of 1994, as well as Articles 1, 2 and 6 of the WTO TFA,” he claimed.

Hon Victor Nwokolo, Chairman of the Committee on Banking and Currency, stated that both government agencies must work together.