In the course of international shipping, import duties and taxes are calculated on your shipment where necessary. Depending on the country, the calculations are done based on the type of item and its value.

Customs Duties and Taxes is probably one of the most complicated aspects of Freight Shipping to Nigeria or any part of the world. It requires a prior understanding by both parties (Freight forwarder and the Customer) in order to avoid occurring and recurring challenges.

Improper preparation for customs duties and taxes can cause a lot of hindrances, such as holdups at customs, unexpected costs, ruins on the experience of customers, and consequently ruins on the relationship with clients/customers.

In this post, you’ll get a simple cracked-down understanding of how to calculate customs duty charge in Nigeria (with a typical example).

Various Terms and their Meanings:
FOB (Freight on Board) – This is the actual cost of the items imported without the handling charge or cost of transportation.
To use the FOB figure in calculating duty charge, you first convert to Naira (If in Nigeria. Use other currency if you’re in other countries).
Formular: FOB (in Naira) x Exchange Rate.

Freight – The cost of transporting the items of importation to the port of designation, either by Road, Sea freight or Air freight. This is also converted to Naira (if in Nigeria. Use other currency if you’re in any other countries).

CIF – Cost of Imported items, Insurance value and Freight Charge
In order to get your CIF, simply add the cost of the items imported, the insurance value (e.g 0.5% of Cost & Freight) and cost of transportation, which is Freight).

Note: Insurance doesn’t come as a standard fee as it depends on your insurance company. Usually calculated on the sum of the cost of goods and freight.

Value Added Tax (VAT) is a tax imposed on the supply of goods and services. Under Nigerian law, the tax is charged at currently 7.5% of the value of the taxable goods and services.

VAT = 7.5% x (CIF + ID + Surcharge + CISS + ETLS). Where;
ID = Import Duty is tax collected on imported goods by customs.

The import duty rate is expressed as a percentage and varies based on HSCode of the item. The rates are defined in the customs tariff. It is usually calculated on the CIF Value (Cost of imported good + Insurance + Cost of Freight charged)

Surcharge: is an additional tax levied on the importation of goods. It is meant for port development.
Formular: 7% x Import Duty (ID).

CISS is an acronym for ‘Comprehensive Import Supervision Scheme’.
Formular: 1% of FOB value.

ETLS is acronym for ECOWAS Tax Liberalisation Scheme. Also referred to as ECOWAS levy. It is the tax imposed on goods imported from non-ECOWAS member countries into ECOWAS member country.
Formular: 0.5% x CIF

How to Calculate Duty Charge and Taxes:
We will use an Illustration of Mr Sodiq Adeleke, an eCommerce businessman who imports and sell Fabrics in Nigeria, for example.

Sodiq ordered for Fabrics from Mumbai, India to the tune of $5,000.

In determining the Customs Duty Charge, the first step is to request for the HS Code. This will help you to know the tax receivable by customs on importing the goods, otherwise referred to as Import Duty.

HS Code [/b]for Fabric is 5407, so its Import Duty is calculated at 10%

Assuming the cost of shipping item (Freight) is $1200
Then, CF = 5000 + 1200

[b]NB: Insurance is billed on both Cost of goods and Freight.

Therefore, assuming insurance charged by your insurance company on the goods is 0.5%.
Then, Insurance = 0.005 x 6200 = $31

CIF (Cost + Insurance + Freight) = 5000 + 31 + 1200

Now, we have CIF = $6231

Ideally, this is converted to Naira, using the official rate for duty, i.e. N328.00

CIF (in Naira) = N2,043,768.00

Cost of Fabrics also to be converted to Naira

Cost = $5000 x 328 = N1,640,000.00

Import Duty Rate: 10% of CIF = 0.1 x 2,043,768 = N204,376.8

Surcharge: [/b]7% of Import Duty = 0.07 x 204,376.8 = N14,306.37

[b]CISS: 1% of Cost = 0.01 x 1,640,000.00 = N16,400.00

ETLS: 0.5% of CIF = 0.5% x 2,043,768.00 = N10,218.84

VAT: 7.5% x (CIF + ID + Surcharge + CISS + ETLS)
0.075 x (2,043,768 + 204,376.8 + 14,306.37 + 16,400 +N10,218.84 )
VAT = 0.075 x 2,289,070.01‬ = N171,680.25

To calculate Customs Duty, all charges are summed up including VAT thus,
ID + Surcharge + CISS + ETLS + VAT = Customs Duty.

204,376.8 + 14,306.37 + 16,400 +10,218.84 +171,680.25 = N416,982.26‬

The custom duty and other applicable taxes and levies in favour of the Federal Government of Nigeria is N416,982.26 payable by Mr. Sodiq Adeleke for the imported item.

The total to be spent all together which include CIF would now be Customs Charge + Cost of items to be landed in Nigeria, thus
[b]N2,043,768.00 + N416,982.26 = N2,460,750.26


For proper monitoring of the import duty, shipping lines and airlines are requested by law to always state the Form M which entails M Form and BA numbers for each consignment on the ship’s/aircraft’s manifest, bill of lading or airway bill, as well as on all shipping documents for all import shipment to Nigeria before such manifest are submitted to the Nigerian Customs Service Department

It seems simple to you and your calculations look simple, but the ports didn't get that way if it was that simple.
If you look at HS8703.2419.00 you have import duty 35% vat 5(7%) and levy 35%
ID and Levy is a form of taxation while VAT is another form, basically I am looking at 77% tax on an item excluding other charges.

China and US started a trade war on 5% ,. 77% is extermination. Barely is there any item that is s5% on the HS code then there is this people within the agency that now tells you the value of the item

sultaan:
It seems simple to you and your calculations look simple, but the ports didn't get that way if it was that simple.
If you look at HS8703.2419.00 you have import duty 35% vat 5(7%) and levy 35%
ID and Levy is a form of taxation while VAT is another form, basically I am looking at 77% tax on an item excluding other charges.

China and US started a trade war on 5% ,. 77% is extermination. Barely is there any item that is s5% on the HS code then there is this people within the agency that now tells you the value of the item

Thank you for your response Sultaan.
Not every goods coming in are levied or you pay VAT on. Some of the goods that you see the percentage of the Hs code are so high, I believe one of the reasons is that the Government wants to discourage people from importing such goods.
It is simple to calculate duty of any goods or products so far as you know what you are doing and you have the accurate information about a particular consignment.

there is a great app on google play store called Nigeria Duty Calculator. it can do all your calculations very easily.

there is a great app on google play store called Nigeria Duty Calculator. it can do all your calculations very easily.
here is the link https://play.google.com/store/apps/details?id=com.amreddys.nidc

dutycalculator:
there is a great app on google play store called Nigeria Duty Calculator. it can do all your calculations very easily.
here is the link https://play.google.com/store/apps/details?id=com.amreddys.nidc

the app is no longer there