Import tariff which is also called import duty, is the tax levied on goods imported into the country. The tax is expressed either as a percentage i.e. fraction of the value of an imported good or per unit of it. When expressed as a fraction of the value of goods, it is called an ad valorem import tax. Example, is an import duty of 10 percent of value of an imported car, so that import duty of ₦200,000 would be paid on a car costing ₦2 million. When expressed on per unit basis, it is called a specific duty. In other words, while an ad valorem duty is calculated on the monetary values of the imported goods, a specific duty is calculated on the weight of quantity of imported goods, irrespective of their monetary value or the market price. Imported duties are assessed and collected in Nigeria by the customs Authority called the Nigerian Customs Service (NCS).
Reasons for the Imposition of Tariffs
(i) Revenue generation: Tariff revenue is a major component of government total revenue. It comes only after the government revenue derived from petroleum activities
(ii) Infant industry protection: Industries have to be protected against unfair competition from abroad. Imposition of tariffs on imports coming from other countries competitors is a way of accomplishing this protection.
(iii) To prevent dumping of goods: Sometimes foreign suppliers deliberately sell imports at a very low prices, even if this means they would be making a loss by so doing. Their home governments too may subsidize them to enable them to sell cheaply in other countries.
(iv) A tool for settling political scores: Tariffs may be imposed on goods emanating from countries perceived to be unfriendly.
(v) Improvement in the balance of payments deficits: Imposing tariffs helps to discourage importation of goods which in turn corrects unfavorable balance of payments
(vi) Protection of domestic currency against depreciation: Depreciation is the use for loses in value of an asset due to wear and tear in the course of its uses.
(vii) Retaliation against tariff imposition by trading partners as an instrument of trade negotiation.
(viii) A change in income distribution pattern.
(ix) To prevent importation of dangerous goods
(x) To promote self sufficiency
EVALUATION
- What is a tariff?
- Give five (5) reasons for the imposition of tariff in Nigeria.
Tools for Trade Restriction and Export Promotion
- Tools for Import Restriction
(i) Import duties or tariff: This is the tax imposed on the importation of imported goods coming into the country.
(ii) Quota or qualitative restriction: This occurs when there is an upper limit to the quantity that can be imported of a particular good.
(iii) Embargo: This refers to an outright ban on the importation of a good.
(iv) Qualitative barriers: These refer to various impediments and inhibitions that are put in place regarding the quality attributes and specification that some goods must possess for them to be permitted to be imported into the country.
(v) Devaluation
(vi) Bilateral trade agreements
(vii) Subsidy to domestics producers
(viii) Excise duty reduction
(ix) Import license.
- Tools for Export Promotion
(i) Tax concession: Tax exemption and concession are often given to export industries and activities, as an incentive to produce more. It is a form of what is called fiscal incentive.
(ii) Grant, subsidies and loans: This is another form of fiscal incentive. The government gives grants or subsidies to export industries to assist them. Credits facilities are also sometime provided on much more concessionary terms (in term of interest rates, maturity, collateral requirements when compared with loans from banks.
(iii) Underwriting of risk associated with export: Due to the operations of exporters in less familiar grounds of foreign countries, they faced peculiar risks, including the risks of non-payment by the foreign customers.
(iv) Provision of information on export potentials or opportunities: Government often enlightens industrialists and entrepreneurs on the opportunity and potentials that in exporting certain products to specific industries.
(v) Reduction of export duties.
(vi) Devaluation of local currencies.
(vii) Infrastructural development
(viii) Organizing international trade fairs
EVALUATION
- Explain 5 measures each taken by a country to (a)restrict imports promote exports
- List and explain 5 reasons for imposition of import tariff
Documents Used in Foreign Trade
There are various documents which facilitate international trade. These documents include:
- Consular invoice
- Bill of lading
- Certificate of origin
- Shipping note
- Airway bills
- Indent
- Ship manifest
- Mate receipt
- Freight note
- Custom specification
- Dock warrant
- Dock landing account
- Bill of sight
- Bill of entry
- Calling forward note
- License
- Export invoice
- Ship report
- Insurance certificate
- Bill of exchange
Consular Invoice
Consular invoice is the invoice that is issued by the embassy of the importing country showing the original price of the goods in the country of origin. It is issued to avoid under invoicing for correct import duties to be paid. Its main purpose it used by the custom authority to ascertain duty payable on goods, also to prevent falsification of prices of goods.
Bill of Lading
A document that contains the detail of the goods being sent. It is the document of title to goods which are sent across two countries. It contents include:
- The name of the ship carrying the goods
- Description of the goods such as the quantity, type and weight.
- Shippers name.
- Names of the consignor and consignee.
- Addresses of both consignor and consignee.
- The port of embarking/port of loading
- Conditions of carriage, e.g. who pays the freight charges
- The port of disembarkation/port of unloading.
- Location of the goods in the ship
- The expected time of arrival.
Certificate of Origin
A document signed by a custom officer of the exporting country to show the country from which the goods originated. It serves as an instrument for preferential tariff. It also helps to determine the outflow of foreign exchange to the country of origin.
Dock Warrant
A receipt for goods delivered and stored in the warehouse. It entitles the holder to take possession of goods. It is also known as dock receipt. It states that goods have been kept in the ware house by the owner awaiting clearing or loading.
Indent
An indent is a document used in international trade. It is an order to buy goods conveyed bby an importer to a potential supplier.
An open indent is an order from abroad to a merchant with freedom to purchase goods from any manufacturer he pleases to while in closed indent; the foreign buyer will specify the manufacturer from whom the goods are to be purchased.
EVALUATION
- Explain 5 documents used in foreign trade.
- Differentiate between open and closed indent.
- Differentiate between bill of lading and bill of exchange.
Functions of Customs and Excise Authority
The Customs and Excise Management Act (CEMA) Cap 45, Law of the Federation of Nigeria, 2004 vest legal authority in the Nigeria Customs Service (NCS) to act on behalf of the Federal Government of Nigeria in all customs matters. The functions of this agency include the following:
(i) Control and management of the administration of the customs and excise laws in general
(ii) Collection of revenues of customs and excise and accounting for same to the government
(iii) Enforcement of import and export restriction and prohibition: This includes carrying out anti-smuggling operations at the ports and borders in order to forestall importation and exportation of contrabands and goods injurious to the health and security of the country.
(iv) Provision of useful inter-agency cooperation with other agencies of government such as the Nigeria Police, NDLEA, NAFDAC, and SON
(v) Trade facilitation
(vi) Handling trade procedures and documentation.
Functions of The Nigeria Export Promotion Council
The functions of the Nigeria Export Promotion Council include the following:
- To promote the development and diversification of Nigeria’s export trade
- To assist in the development and promotion of export-related industries in Nigeria
- To spearhead the creation of appropriate incentive
- To articulate the promotion and implementation of policy relating to export and programmes of the Nigerian Government
Functions of The Federal Airports Authority of Nigeria (FAAN)
The functions of the Federal Airports Authority of Nigeria (FAAN) include the following:
- Development, maintenance and provision of necessary services and facilities for air transport
- Provision of adequate facilities and personnel for effective security at all air port
- Creating in a general sense, conditions for development of air transport and services connected with it.
- Development and provision of facilities for surface transportation within airports.
- Provision of accommodation and other services for effective handling of passengers and freight.
Functions of The Nigeria Ports Authority (NPA)
The functions of the Nigeria Ports Authority (NPA) include the following:
- Development, ownership and operation of ports and harbours
- Provision of safe and navigable channels
- Offering of cargo handling and storage services
- Maintenance of ports facilities and equipment.
- Ensuring safety and security.
- Development and ownership of property.
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