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Customs Want 35% Levy on Vehicle Importation Reduced

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  • Customs Want 35% Levy on Vehicle Importation Reduced

The Comptroller-General of Customs, Col Hameed Ali (retd.) has called on the Federal Government to reduce the 35 per cent levy on imported vehicles so as to check the rising cases of smuggled vehicles into the country.

Ali said this on Wednesday in Abuja at the unveiling of a Strategic Revenue Growth Initiative which was held at the Ministry of Finance.

He said already the Nigeria Customs Service had made a proposal to the Ministry of Finance on the need for a reduction in the 35 per cent levy on imported vehicles.

Ali said currently, any new vehicle imported into the country attracted an import duty of 35 per cent and an additional levy of 35 per cent.

This, he noted, brought the total duty payable on such a vehicle to about 70 per cent.

He described the 70 per cent being charged by the government as high, adding that time had come for it to be reduced.

In achieving this, he said, the government could still retain the 35 per cent import duty while the additional 35 per cent levy could be tinkered by bringing it downwards.

He said, “First, we must understand the fact that smuggling in most cases did not really occur because of the tariff that is placed on goods in Nigeria.

“When we talk about vehicles, yes, new vehicles attract 70 per cent duty; that is 35 per cent duty and 35 per cent levy but most of the vehicles that are being smuggled through our borders are not new vehicles, they are used vehicles.

“And the value is calculated based on the year of make and other attributes. So, the motivating factor that gets people to move these goods to our neighbouring countries is with the sole aim of smuggling them into Nigeria.

He added, “The 35 per cent is a baseline which is the duty, but the 35 per cent levy is what we think should be tinkered with.

“We should be able to reduce that to a level that it would be affordable. 70 per cent is on the high side, there is no doubt about that for new vehicles but we cannot touch the baseline of the tax regime.”

The Minister of Finance, Mrs Zainab Ahmed, who unveiled the Strategic Revenue Growth Initiative, said that the government was concerned about the inability of some of its agencies to meet their revenue target.

She admitted that it had become a challenge for the government to mobilise fiscal resources to deliver on its developmental objectives, adding that President Muhammadu Buhari had directed that revenue generation needed to be enhanced.

According to her, while oil revenue to oil Gross Domestic Product ratio stands at about 39 per cent, non-oil revenue to non-oil GDP is about 4.2 per cent.

He said the country’s Value Added Tax revenue to GDP stood at less than one per cent, adding that this was low when compared to the ECOWAS average of 3.4 per cent.

In terms of excise revenue, she said at 4.1 per cent, revenue generated from excise duty in Nigeria was low compared to Ghana at 15.3 per cent and Kenya at 19.5 per cent.

She said, “Nigeria’s low revenue generation capabilities have been an enduring challenge to past and present governments.

“Although, we are celebrated as the country in Africa with the largest economy, translating this wealth into revenues remains a challenge.

“We have, therefore, face difficulty in mobilising domestic funds necessary for human capital development and infrastructure that are both drivers of sustainable economic growth.

“Our current revenue to Gross Domestic Product ratio of about seven per cent is unsatisfactory and we are keen on exerting all efforts in turning this around.”

Ahmed said she had tasked the Ministry of Finance and its agencies to identify what could be done to turn around the current revenue situation.

When asked when the planned increase in VAT would be implemented, the minister said a committee was currently looking at items that would be captured under the new VAT regime.

She said, “We are studying a possibility of a VAT increase but you also know that the increase of VAT requires an amendment of the law.

“First of all, the steering committee will look at the details; it is most likely the VAT increase will be selective. It will be on special items, so it won’t be across the board.

“I am sure you are already aware that there is a number of items that are VAT exempt such as food and drugs.

“There would be a VAT increase during the course of 2019; we would have clarity as to which items and what the rate would be and we would have to take a request to the National Assembly for amendment before it takes into effect.

“There is also going to be a luxury tax. Already, there is a luxury tax imposed on things like jets. There are few exceptional items that are classified as a luxury but we are contemplating increasing excise duties on carbonated drinks, just like we have excise duties now on tobacco and on alcohol.

“But this is going to be a subject of study, because we have to identify which ones would be affected and the best way to apply in which to apply the taxes.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Business

Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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