FOUR companies, two with foreign ownership, that deal in the importation of electronic and household appliances have exploited a defective import tariff waiver policy of Nigerian government and special forex allocation to manufacturers by Central Bank of Nigeria (CBN) to make billions of naira through fraudulent claims.

One of the companies, Somotex Nigeria Limited, is a shadow business of an offshore company registered in the British Virgin Islands, a well-known tax haven. The other three companies are Sims Nigeria Limited, Fouani Nigeria Limited and Dee Kay Nigeria limited. These companies have exclusive dealerships into the importation of global brands, such as LG and Samsung electronics.

A joint investigation by OrderPaperNG and The ICIR shows that while these companies enjoy the status and privilege accorded to manufacturers that import raw materials, they are mere traders. Nevertheless, they are given forex concessions at CBN rate for manufacturers. They also get duty waivers, normally given to manufacturers that import raw materials.

The import duty waivers involve Completely Knocked Down (CKD) and Semi Knocked Down (SKD) goods, a controversial policy that gives tax concessions to importers who are willing to import products in parts to be assembled locally in Nigeria. By this policy, the government aims to create jobs through manufacturing as well as accelerate the transfer of technologies. An initial investigation by OrderPaperNG published in July 2018 had exposed this import waiver fraud involving the same companies which have continued, according to impeccable sources, to engage in the scheme.

Those who import goods in CKD/SKD obtain tax waivers from the Ministry of Finance and pay lesser import tariff. Instead of the usual 20-35 per cent duty on such products, they pay just 5 per cent with the belief that the importers have assembling plants where they couple the items, and employ Nigerians and create an opportunity for transfer of technology.

The federal government justifies these waivers based on the provisions of the Customs and Excise Tariff Act and the Finance Miscellaneous Act 39 of 1990, among other legal and administrative instruments. Import waivers are issued by the Ministry of Finance and implemented by the Customs Service.

But investigations show that the four companies import fully built products and still claim duty waivers as if they brought in CKD/SKD. Customs documents obtained by OrderPaperNg and also analysed with The ICIR revealed that the four electronic dealers defrauded Nigeria of over N25 billion in CKD/SKD waiver claims between 2010 and 2018.

READ MORE: https://www.icirnigeria.org/investigation-how-offshore-company-others-defrauded-nigeria-of-over-n25-billion-in-revenue/