Nairametrics
Last week, I read how Davido, a global music star, jokingly asked for donations to clear his luxury Rolls Royce car from the Lagos port. That story may be an exaggeration, but it does provide a backdrop to discuss fiscal federalism in Nigeria. Fiscal federalism is the assignment of revenue collections and spending powers between the federating units.
Who gets the cash paid as import duties if Davido, from Osun State in Nigeria’s Western Region, imports a Rolls Royce into Nigeria and pays import duties? The State? The Federal Government? Who?
How much is paid to import a Rolls Royce to Nigeria?
The lowest cost of a 2021 Rolls Royce Cullinan 4 door SUV AWD comes with a manufacturer’s suggested retail price of $300,000. We summarise from the internet that Mr. Davido did upgrade his Roys Royce. Thus a rumoured price of about $500,000 is appropriate. With the exchange rate at the NIFEX of about N413.09, that’s about N206.54m
How much will Davido pay to Nigerian Customs?
According to the Nigerian Customs Service, Mr. Davido will pay an import duty of 35% plus a 5% levy charge for new luxury vehicles imports into Nigeria. The total cost will include the cost of the car, insurance paid, and Freight (CIF). Thus the imported Rolls Royce will be taxed on the car’s invoiced price, plus shipping and insurance. There will also be a 7.5% Value Added Tax (VAT) on the CIF value of the import. To keep it simple, let us assume a total cost plus shipping and insurance at $500,000.
A table capturing the total costs would look like this…
