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Operators of FTZs to pay duties on foreign raw materials, says Customs

By Adaku Onyenucheya
21 September 2022   |   3:43 am
Investors and enterprises operating in the country’s free trade zones (FTZ) will no longer pay duties, freight and demurrages on all locally-sourced raw materials, the Nigeria Customs Service

[FILES] Nigeria Customs Service PHOTO: NAN

Investors and enterprises operating in the country’s free trade zones (FTZ) will no longer pay duties, freight and demurrages on all locally-sourced raw materials, the Nigeria Customs Service (NCS) has disclosed.

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However, the operators will pay duty on foreign raw materials brought into the zones while importers of end-products will pay freight on their imported raw materials if the products are brought into the customs territory.

The Customs Comptroller General, Hameed Ali, disclosed this during a stakeholders’ sensitisation meeting on the procedure for goods manufactured in FTZs destined for Customs territory, held at the Apapa Customs Area Command, Lagos.

He said the changes were a part of the effort to create an enabling business environment in the country.

Ali, who was represented by the Deputy Comptroller General in charge of Excise, FTZ and Industrial Incentive, Katherine Ekekezie, explained that following complaints by the FTZ operators, the agency had developed a process for the release of goods manufactured, remodelled, stored or assembled in the zone and destined for Nigerian territories. He added that it would promote the agency’s trade facilitation agenda.

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“This process is to resolve all the complaints we have been getting in the free trade zones. It will unify every procedure of the NCS and all free trade zones in the country will abide by this same process. It is to make sure that customs duty is collected based on the imported raw materials.

“For instance, if you use seven raw materials to produce an item in the free trade zone, if four were sourced locally and three imported, customs will collect duty only on those three imported raw materials.

“This is one of the incentives to the free trade zone operators since they have brought their money and have come to improve on where the zone is sited. Another is that, by the time the finished product is taken into the customs territory, it will not pay the freight. Duty will only be paid for those imported raw materials,” she explained.

He described the incentive as mutual as it requires the operators to also give something back, such as developing the environment where they are.

“Some of them build schools and hospitals, and there will be massive employment for members of the local communities. These and more are what we will benefit from the investors,” he added.

Ali further explained that companies in the FTZ couldn’t source Form M since they are not indigenous; neither will customs require a Pre-Arrival Assessment Report (PAAR) from them.

“Importers who bring goods into the Nigerian market (from the FTZ) will source Form M, and it will capture the data showing the full product and all the raw materials used in producing the end product in percentages. The importer is the one responsible for the procurement of Form M and PAAR,” he explained.

On his part, the Customs Area Controller, Apapa, Compt. Yusuf Malanta, stressed that sensitising stakeholders and training customs officers on the new procedure is important to the agency’s ongoing drive towards making all its procedures transparent for service delivery at par with international best practices.

He said this would also help to streamline the FTZ process and procedure by providing an enabling business environment for investors and other stakeholders in line with the agency’s trade facilitation agenda.
Earlier, the Managing Director of the Nigerian Export Processing Zones Authority (NEPZA), Prof. Adesoji Adesugba, represented by his Technical Advisor, Mu’azu Ruma, commended the Customs for the move.

Adesugba also advised on the importance of continuing with the sensitisation by Customs to enable stakeholders to have a full grasp of the processes in other to avoid misunderstanding and dispute.

“We know that there may be some hiccups here and there in the process of implementation, but we believe the incentives and concessions that we have been seeking and going back and forth for, have been properly captured now,” he said.