The Chairman of the Presidential Committee on Fiscal Policy, Taiwo Oyedele, has clarified the federal government’s rationale for not yet approving a fixed or pegged exchange rate for calculating Customs import duties.
In a statement on Tuesday, Oyedele clarified that the president cannot unilaterally sign an executive order to implement a fixed exchange rate for Customs duties, according to Nairametrics.
He pointed out that the recently repealed and reenacted 2023 Customs Act mandates a market-driven exchange rate.
Oyedele also mentioned that his committee is actively working to modify the law in the near future to allow for exchange rate adjustments, aiming to enhance the flexibility and effectiveness of the Customs duty framework.
He emphasized that this modification must be approved by the National Assembly and highlighted the government’s acknowledgment of the significance of such interventions in enhancing the ease of doing business in the country.
“The other point that my brother raised that our recommendation that the custom service should use a fixed exchange rate that is much lower than the actual rate hasn’t been implemented. And it’s a number of factors.
“The biggest one being that the Nigeria Custom Service was repealed and reenacted in 2023, which is last year. And in that law, it says that the exchange rate to use for Custom must be the official exchange rate, which means even though we drafted an executive order, the president cannot just sign to override the law.
“We then have to grow through the process of trying to change the language in the law so that when it becomes necessary, maybe later in the future, it will not be as complicated as it is now. But I think there’s a general understanding within government that these interventions are extremely important,” Oyedele said.
Speaking further, Oyedele announced that the new withholding tax regulations have now been gazetted by the federal government.
He emphasized that the implementation of the new withholding tax regulations will begin immediately, effective Wednesday, following approval from all tiers of government.
According to Oyedele, these new regulations are expected to provide relief for manufacturers and small businesses across the country.
““I do have some good news. The good news is that the withholding tax regulation has now been gazetted. The only reason why it hasn’t been published today is because it’s a public holiday. So first thing tomorrow, you’ll see a copy of the gazette.
“And that provides a lot of relief not only for manufacturers, but also for every other businesses in terms of taking away some of the burden about funding their working capital, even their interest rate,” he noted.
The fluctuating exchange rate for Customs import duties has created significant challenges for participants in the import and export sector.
This exchange rate, which is tied to the changing value of the naira against the dollar, complicates trade planning for manufacturers and importers.
As a result, they are forced to rely heavily on a replacement cost model, making it difficult to forecast costs and manage budgets effectively.
