On March 24, the Nigeria Customs Service (NCS) issued a statement that it had not reached any agreement with the Central Bank of Nigeria (CBN) in respect of the Guidelines on the Introduction of E-Evaluator, E-Invoicing for Import and Export in Nigeria issued by the CBN on 21st January 2022 (the “Guidelines”). This recent revelation negates a widely circulated report released on March 18 that the NCS had revoked its opposition to the implementation of the guidelines. The NCS’ denunciation of the guidelines had been premised, inter alia, on the grounds that the guidelines would inhibit trade and was issued by the CBN in contravention of the law. Although, the guidelines came into effect on February 1, the attendant controversies generated by their introduction had greatly impacted their implementation. This article analyses the guidelines and appraises the issues raised by stakeholders against their implementation.
Some of the prominent innovations of the guidelines include the replacement of Hard Copy Final Invoice with E-Invoice. The digitalization of the system, guarantees to a large extent, the government’s ability to track the actual value of import and export transactions. Thus, all import and export transactions in Nigeria require the authentication of e-invoices by authorised dealer banks (“ADBs”) and the subsequent submission of the authenticated e-invoices on the Nigeria Single Window Portal- Trade Monitoring System.
In addition, the guidelines introduced the Benchmark Price which is calculated to operate on a global price verification mechanism using a benchmark price. Accordingly, the guidelines mandate that import and export transactions with unit prices that are more than 2.5% of the verified global checkmate prices would be queried and not be allowed for successful completion of either e-Form M (the form for import) or Form NXP (the form for export). The significance of the introduction of the benchmark price is to prevent the incidence of over-invoicing and under-invoicing which are notorious means of fraudulently transferring funds across borders.
The guidelines also stipulate that all importers and exporters must ensure that purchase or sale agreements with foreign counterparties contain a clause affirming the parties’ compliance with the obligations set out in the guidelines and that the supplier’s invoice must be submitted in electronic format and authenticated by an ADB as part of the documentation required for payment. Equally, a counterparty who is either a supplier or buyer of goods or services for import or export operations into or out of Nigeria respectively is required to register on a dedicated electronic portal provided by CBN and operated by CBN’s service providers. Afterwards, a CBN-appointed service provider shall deliver a verification report and digital certificate to the supplier/buyer valid for a year from date of issuance.
The following transactions are however exempted from e-invoice submissions under the guidelines: (i) all individual invoices with a value less than $10,000 or its equivalent except where the suppliers have an annual cumulative invoicing value equal to or above $500,000; (ii) import and export transactions made by all security agencies in Nigeria; (iii) supply to diplomatic and consular missions and international agencies dependent on United Nations; (iv) donations made by foreign governments or international organisations to recognised humanitarian organizations to mention a few.
Despite the positive implications of the guidelines above, its implementation was challenged by stakeholders. While the guidelines were issued on January 21, it took effect on February 1. The innovations were considered too drastic with the implication that already negotiated deals would be adversely affected. The House of Representatives and the Manufacturers Association of Nigeria (“MAN”) called for the suspension of the guidelines and demanded that CBN provide a 90-day window before implementation. However, the CBN’s position is that it had via its circular of August 5, 2020 communicated its intention to introduce e-invoicing for import and export transactions in Nigeria and that it was irrational for stakeholders to maintain this position. The CBN had also indicated that it informed the NCS via its letter of July 8, 2021 that it was deploying a process for verification of prices of goods before the allocation of foreign exchange at the point of e-form registration.
The value of stakeholder engagement in respect of landscape changing policies like the guidelines cannot be overemphasized and the present imbroglio with respect to the implementation could have been averted if there had been a form of stakeholder engagement prior to the issuance of the guidelines by the CBN. As it stands, the controversies surrounding the guidelines have somewhat hindered their smooth implementation. It has been about 70 days since the issuance of the guidelines by the CBN and a considerable length of time had already passed to afford stakeholders ample time to ensure seamless compliance.
The NCS and other stakeholders also alleged that the CBN issued the guidelines in contravention of CEMA which domesticated the World Trade Organisation’s (“WTO’s”) General Agreement on Tariffs and Trade 1994 (“GATT”). Article VII of GATT provides that the value of imported goods for customs purposes should be based on the actual value paid or payable for them. Thus, the use of benchmarks for importation and exportation is deemed to be in violation of CEMA.
Indeed, the agreement on the implementation of Article VII of GATT 1994 has been assimilated into the First Schedule to the Act. Paragraph 1 of the First Schedule provides that the customs value of goods bought or imported for use in Nigeria shall be the transaction value of the goods adjusted in accordance with the provisions of paragraph 7 (1) of the First Schedule.
“Transaction value” as defined in Paragraph 16 of the Act means the price actually paid or payable for goods when sold for export to Nigeria. Flowing from the above, the essence of determining the transaction value of goods imported into Nigeria under the Act is to determine the “customs value of goods imported Nigeria” which is defined under Paragraph 16 of the First Schedule as the value of goods for the purposes of levying ad valorem duties of Customs on goods imported into Nigeria.
The question to be asked is whether the guidelines seek to determine the customs value of goods imported for the purposes of levying ad valorem duties of Customs on goods imported into Nigeria? The answer appears to be in the negative as the essence of the benchmark price introduced by the guidelines is for the purposes of determining the actual value of import and export rather than the customs value to prevent money laundering (as explained by the CBN) which is within the regulatory purview of the CBN. In view of that, an adoption of the purposive rule of interpretation reveals that the Guidelines and the Article VII of GATT assimilated under the First Schedule of the Act are designed to achieve different objectives. The guidelines do not therefore contravene the Act.
The issuance of the guidelines appears to be a step in the right direction and it would be highly desirable for stakeholders to support their implementation in curbing the menace of money laundering.
- Muritala is of the Law Crest, Lagos.