Automotive policy: 35% levy on Tokunbo vehicles begins July 1

Automotive policy: 35% levy on Tokunbo vehicles begins July 1

The implementation of the 35 per cent import levy on used cars will
now begin on June 30, 2015 as the Federal Government has once
again shifted the commencement date by two months.
In a move to encourage local assembling of vehicles, the government
had in September 2013 raised the import tariff on fully-built cars and
used vehicles from 22 per cent to 70 per cent made up of 35 per cent
duty and 35 per cent levy.
It also announced a zero per cent tariff on Completely Knocked Down
units (vehicles) and five per cent to 10 per cent on Semi Knocked
Down units.
The first phase of the policy, involving the payment of the 35 per cent
duty came into effect in February 2014.
The Director-General, National Automotive Council, Mr. Aminu Jalal,
informed our correspondent through a text message on Monday that a
circular had been issued by the Federal Ministry of Finance deferring
the implementation of the levy to June 30. He did not give any reason
for the postponement.
When the implementation of the second phase was first moved from
July 1, 2014 to January 1, 2015, the government had said that it was
to enable local vehicle assembly plants to ramp up production in order
to meet the nation’s demand for brand new vehicles.
When it was last month deferred again to April 30, 2015, the Federal
Government said through NAC, an agency of the Federal Ministry of
Industry, Trade and Investment, that the postponement was due to the
delay in establishing a vehicle finance scheme.
Jalal had said, “The arrangement for the establishment of the
affordable vehicle finance scheme suffered a delay of about four
months due to the Ebola Virus Disease. The staff of the collaborating
bank, Wesbank of South Africa, delayed their planned trip to Nigeria to
set up operations from September 2014 to January 2015.
“Hence, the new date for the start of operations of the financing
scheme is April 2014. Accordingly, the Minister of Finance has been
asked to extend the levy deferment on used cars to April 30, 2015.”
Nigeria imports about 400,000 units of vehicles annually, with about
300,000 being second-hand. As a result of the devaluation of the naira
and the subsequent rise in the cost of buying used vehicles and
clearing them at the nation’s seaports, auto dealers at the Berger Yard
Auto Market in Lagos have reduced the volume of importation by over
50 per cent.
Port and Terminal Multi Services Limited, the largest terminal for
vehicle imports, has recorded a 61 per cent drop in the volume of
imported vehicles. The terminal had in January 2014 handled 16,000
units of vehicles, while only 6,200 passed through it last month.
Efforts to get a response from the Special Adviser to the Minister of
Finance on Media, Mr. Paul Nwabuikwu, proved abortive as he neither
picked his calls nor respond to a text message sent to his mobile
telephone.