How to calculate customs import duties for shipping goods to Nigeria

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How to calculate customs import duties for shipping goods to Nigeria

                Most importers in Nigeria are always in confusion when it comes to the customs duties on the goods they will import to Nigeria. They always ask questions on how much it will cost in order to calculate the profit margin on the shipments. Nigerian importers need to understand the requirement and the formula the Nigerian Customs service use to generate the total import duties and levies.

In this article, I am going to explains all it takes to determine the total customs import duties on all your shipments. We will take it step by step for you fully understand all the documents you will need.

Firstly, the HS Code is the main determinant of your customs duties because it will give you the class of goods your goods belongs to.

Secondly, documents like Form M, SONCAP Certificate and PAAR will be some of the documents that will show you the exact figure you will pay due to the value of goods you declare or purchase.

I want us to understand what all these mean and how we will get them right. In the next phases of my explanation, I will analyze what HS CODE means and how to know which one your goods belong to.

What is HS CODE?

HS Code means Harmonized Commodity Description Coding System. It is also mean Harmonized System for tariff nomenclature which comprises standardized system of names and numbers in order to classify products for international trade. The system was adopted in 1988 by World Customs organization (WCO).

The HS code is organized into 21 sections, which was further group in 96 chapters and approximately 5000 headings and sub-headings. The section and chapter titles describe broad categories of goods, while the headings and sub-headings describe more details about the products. The HS Code has 6 digits the first 2 digits is for section, the second 2 digits is for Chapters and the last 2 digits is for headings and subheadings.

However, any country can add up to extra 4 digits depending on their import or export requirements. For example, Nigeria has 10 digits based on the more classifications of the imported goods.                                   

How to know HS code for a particular products?

With my experiences in shipping for years, I have come across many importers of goods that do not know the HS code of their products. I will give you insight on how to know the HS code of your goods.

  1. You can know your HS code through information on SON product Certificate. Standard Organization of Nigeria issues out certificate for conformity to the Nigeria standard on every product that intend to be imported to Nigerian ports (whether air or sea).
  2. The other way to know your products HS is through Nigeria Customs service website. You will find that section on the left side of their website. You will need to type the description of the goods. You will see the result through the search result page of Nigeria Customs service.
Documents to raise Pre-Arrival Assessment Report (PAAR) for customs import duties

Pre-Arrival Assessment Report is customs final document that shows the total amount payable by importers. This is a document that custom valuation gives importer after submission of all necessary documents for assessment. PAAR document can be petitioned if the value lifted by valuation unit is much for the importer.

The following documents are needed to rate PAAR:

  1. Form M – This is document that importer will collect from bank with approval of Nigeria customs under Central bank endorsement. This document will show all the information of the importer, the value of the goods to import, the Country of origin, name of the manufacturer and description of the products. The issuance of the document should come prior goods are on board and shipping. The date of issuance should be before date the goods will be on the ship in order to avoid delay in PAAR issuance by customs.
  2. Bill of lading – This document is from the shipping company that owns the vessel that will carry the goods from country of origin to destination. It will show all the information about the goods with some information of on the Form M. The vessel number, Container number, delivery agent and bill of lading number will be on the document for tracking and clearing purposes.
  3. Combine Certificate of Origin and Value
  4. Agencies permit certificate like SONCAP, NAFDAC import permit
  5. Commercial Invoice or Proforma invoice
  6. Packing list
  7. Other documents that may be required for waiver if it is Government agency
Component of Payable Customs import duties

Majority of importers do experience shock when the total amount on PAAR is different from the amount they have to pay after a licensed customs agent has registered the PAAR on customs server. To be sincere with you, there are some hidden charges that will surface after PAAR capturing on Nigeria customs server; which I will explain to you.

The following are the components of the assessment notice by the customs which the import will pay into the Nigeria bank before the goods can be released by Customs command.

  1. Import Duties – The import duty will depend on the value of the goods. It will indicate in percentage with HS code assign to it by Nigerian Customs service. Example, let us say the value of a goods is $5000 and the HS code import duty percentage is 15%,  the import duty of the good will be 15% of $5000 = $750
  2. Comprehensive Import Supervision Scheme (CISS) – the percentage assign for this is just 1%. This money is for Nigeria customs for handling supervision of the inspection process. That means as importers you will pay 1% of $5000 = $50
  3. Port surcharge – This is the amount of mount you will pay the Nigerian Ports Authority for using their ports for shipping your goods to Nigeria. The percentage for this is 7%. That means importers will pay 7% of $5000 = $350
  4. ECOWAS Trade Liberalization Scheme (ETLS) – The percentage on this is 0.5%. This is a levy that goes to all ECOWAS Countries for mutual trade. The importer will pay 0.5% of $5000 = $25
  5. Value Added Tax – This is tax on every goods in Nigeria. It is 5% as usual. Please note, not all the imported goods has VAT, some are VAT free. Let calculate the last component – 5% of $5000 = $250

Below is the mathematical analysis of the total duty to pay

  1. Import duty (depending on the % on the HS Code) assuming is 15%

                                                                                                  15% of $5000 = $750 @ 305 NGN =

                                                                                                                                                                                228, 750 NGN

  1. Comprehensive Import Supervision Scheme (CISS) 1%

1% of $5000 = $50 @ 305 NGN

                                                = 15, 250 NGN

  1. Port Surcharge – 7%

7% of $5000 = $350 @ 305 NGN

                                                = 106, 750 NGN

  1. ETLS – 0.5%

0.5% of $5000 = $25 @ 305 NGN

                                                = 7, 625 NGN

  1. Value Added Tax

5% of $5000 = $250 @ 305 NGN

                                                = 76, 250 NGN

Total – 434, 625 NGN

In conclusionThe above amount is the value an importer will paid if the data above is applicable to his/her shipments. The amount with the illustration is just for import duties. The other charges like terminal fee, Container detention and retention (if it is full container goods), shipping invoice, inspection fees and agency handling charges are not included.

You can contact us for more explanation. We are professional customs clearing agent in Nigeria.

Follow Michael Adewale:

International Freight Forwarder, Shipping Consultant and Customs Clearing Agent

He is Chief Executive Officer at Distinctcushy Global Freight Forwarding Company Limited, an International Freight forwarding company and Customs Clearing Broker in Lagos, Nigeria. He loves integrity and value honesty with importers and Exporters in Nigeria and abroad.

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