The Nigerian Shipowners Association (NISA) has asked for the removal of duty paid on new vessels purchased by Nigerians.
According to Aminu Umar, the President of NISA, in an interview in Lagos, the 12.5% duty charge on new vessels had deterred shipowners from registering their vessels at the ship registry established by the Nigerian Maritime Administration and Safety Agency (NIMASA).
The duty, which had been revised from 15% down to 12.5%, created a one-sided competition between foreign shipping companies and domestic shipping companies, with foreign operators being charged a lower rate compared to what the domestic shipping companies are charged when a new vessel is brought into the country.
Meanwhile, according to the Director-General, NIMASA, Dr Dakuku Peterside, the agency is working with the Federal Ministry of Finance and the Nigerian Customs Service to reduce special duty rates for the acquisition of new vessels.
“We are engaging both the Customs and the Federal Ministry of Finance to create a special tariff regime for those bringing in vessels and vessel spare parts into the country. That will help reduce tariff on vessel acquisition and importation of spare parts,” Dr Peterside.
Mr Umar stated that the 12.5% tariff was rather high and asked for the complete removal of the special duty, comparing the maritime industry to the aviation industry where they pay zero taxes on new aircraft acquired.
“We have made a presentation to the government to make the environment-friendly through suspension of the duty on Nigerian-owned vessels.
“Our counterparts in the aviation sector pay zero duty on new aircraft but a Nigerian shipowner is made to pay 12.5% of the total cost of the vessel as duty. This runs into millions of dollars.”
The big picture: If calls by the association of Nigerian Ship Owners for the complete removal of the special duty is answered, it could place the Nigerian Shipping companies in a better position to maximize the benefits of African Continental Free Trade Agreement.