The Nigerian Customs Service (NCS) is vested by law, with the powers to collect and manage the applicable duties, taxes and levies imposed on goods and items imported into the country, as well as protect the integrity of the country’s territorial borders from smuggling activities.
For these purposes, the NCS is regulated by the Customs and Excise Management Act (CEMA) Cap C45 Laws of the Federation of Nigeria 2004 and other supplemental regulations.
Section 37 of the CEMA particularly provides, that all imports into Nigeria are subject to import duties, which will be determined by the prevailing customs procedure at the time of importation. Consequently, all items imported in-country, for use in Nigeria, are subject to an import duty fee, save for where this is waived.
An import duty may be waived for various reasons, however, this paper will focus on the Temporary Import Permit (TIP) regime and its relevance to Nigerian imports.
THE TIP REGIME
Section 42 (1) of the CEMA provides as follows:
“…where the Board is satisfied that goods are imported only temporarily and are intended to be re-exported or consumed on board the importing ship or aircraft, it may permit the goods to be delivered on importation, or to remain on board the importing ship or aircraft for re-exportation or consumption on board as the case may be, subject to such conditions as it sees fit to impose, without payment of duty….”
The NCS in interpreting this section, grants concessions to import on a temporary basis, where it is satisfied that the item being brought into Nigeria, will be re-exported out of Nigeria, within a short period of time. This concession known as a TIP, is granted upon the importer meeting certain requirements. This concession (which is at the discretion of the NCS) has been granted for oil rigs, ships, barges and other special equipment of high value (in practice USD 100,000 has been considered as a minimum by the NCS), provided such equipment is not available for purchase/lease in Nigeria and there is an intention to re-export such equipment upon conclusion of the work. Generally, it is expected that the TIP should be obtained, prior to shipping the items/goods to Nigeria.
A key requirement for obtaining a TIP, is the TIP bond, which is to be issued by a Nigerian Bank or Insurance Company, covering a value equivalent to the import duty ordinarily payable and an additional amount not exceeding twenty-five percent (25%) of the import duty. The TIP bond is to remain in force for its entire duration (and any extensions thereof), and where the terms of the TIP are breached, the bond will be forfeited. It should be noted that the TIP bond estimate is usually on a case by case basis and subject to the discretion of the NCS.
Where a TIP is issued, it is valid for a period of twelve (12) months from the date of issue. The NCS is however empowered to extend the TIP for two (2) further periods of six (6) months each, cumulating in a maximum TIP period of twenty–four (24) months. Further extensions may be granted on an exceptional basis for a period not exceeding six (6) months, at the sole discretion of the NCS and upon showing good cause for such further extensions. At the expiration of the stated period, the imported goods/equipment must be re-exported and clearance obtained from the NCS, OR such imported goods converted to Nigerian consumption and import duty paid on the goods.
IS TIP REQUIRED FOR CARGO VESSELS?
From the provisions of the relevant regulations specifically Section 42 of CEMA referenced earlier, it can be inferred that items/goods brought into Nigeria on a temporary basis should be exempt from import duties and therefore made subject to the TIP regime.
Consequently, where items/goods are brought into Nigeria for consumption, such goods will be subject to import duty payments. The CEMA specifically provides for this, as highlighted below, as follows:
Section 37: –
“Except as permitted by or under customs Laws, no imported goods shall be delivered or removed on importation until the importer has paid to the proper officer any duty chargeable thereon, and that duty shall, in the case of which entry is made, be paid on delivery of the entry to the proper officer”.
Section 38: –
“Any goods brought or coming into Nigeria by sea not being carried in a ship as cargo, stores or baggage shall be chargeable with the like duty, if any, as would be applicable to those goods, if they had been imported as merchandise.”
It can therefore be gleaned from these regulations that cargo is subject to import duty, where it is:
- Imported for use in Nigeria
- Not subject to any exemption under the customs law.
However, the ship, vessel, aircraft, or vehicle used in conveying such cargo, is not subject to import duty, as the means of carriage is not to be used in Nigeria. The relevant procedure for such means of carriage is as provided in the: Importation and Exportation by Air Regulations; Importation and Exportation by Post Regulations; and Importation and Exportation by Sea Regulations.
In light of the above, TIPs will be required where:
- The item imported is subject to import duty;
- The item is not subject to any exemption under the custom law;
- The item is imported into Nigeria for a short period, after which it will be re-exported; and
- The item is categorised by the Board of the NCS, as eligible for TIP.
UNCERTAINTIES SURROUNDING THE TIP REGIME
Despite the seemingly straightforward TIP policy as can be gleaned from the relevant regulations, the implementation and administration of the TIP regime in Nigeria is fraught with many challenges.
The primary challenge is the lack of distinct regulation by the NCS, stipulating the procedure and implementation of TIPs. Such weak policy has resulted in gross