Business Studies
Topic: Role Of Customs And Excise In Foreign Trade
Custom: The Nigeria customs service is a federal government establishment responsible for the collection of taxes on imported goods as well as locally manufactured goods. Tax paid on imported goods is known as Custom Duty, while tax paid on goods manufactured locally is known as Excise Duty. The agency enforces the payment of custom duties.
Duties are payable using custom tariff. The tariff stipulates the amount or percentage payable on a particular imported goods. This tariff is designed by the government through ministry of finance.
This levy is aimed at raising the cost of the goods in the country. The aim is to protect indigenous manufacturers of similar goods and to control the rate of imports of certain goods. This tariff is adjusted upward or downwards to meet economic requirement of the country at any particular time. For example if the government aims at importing more foreign goods the tariff is reduced as it was the case with importation of rice in Nigeria. On the other hand tariff is increased if the government desires to discourage or reduce volume of import of a particular goods.
Excise duties is tax payable on all goods manufactured locally. The principal aim of this duty is to attract revenue for the government and to act as a compensation to government from the companies for providing infrastructures under which the companies operate. However, duties may be waved to help companies which are considered essential by the government. For example, companies producing educational materials, agricultural or pharmaceutical products may be exempted from excise duty.
The Role Of Custom And Excise In Foreign Trade Can Be Summarized As Follows:
1. Generation of income for the government through collection of import and export and excise duties.
2. Controlling the rates of imports of certain goods through imposition of tariffs so as to meet the economic requirement of the country, such as protection of indigenous firms with high tariff or provision of essential commodities and materials by reducing of tariffs on important duties.
3. They discourage the smuggling of goods into the country by guarding the Nigerian boarder, airports and seaports
4. Prevention of importation of banned goods into the country by confiscating them and selling them by auction or even burning them as well as prosecuting any offender.
5. Ensures the security of goods kept in the bonded warehouse by ensuring that owners do not cart them away without payment of import duties due to them.
6. Provides statistics to Ministry of Finance for the determination of the country’s balance of trade and balance of payment via National Bureau for Statistics.
7. Provides quarantine services for prevention of diseases from unhealthy animals and plants.
8. Through customs duties, the country’s balance of payment is regulated by increasing import duties to bring it down and vice versa.
Other Roles Of Nigerian Custom Services Include:
1. Generating revenue for the government by imposing tax on locally produced goods through excise duty.
2. Encouraging the production of essential commodities by waving excise duties such as the production of educational materials, drugs, agricultural products etc.
3. Issues licenses to indigenous manufacturers of certain types of goods.