INDUSTRIAL INCENTIVES
This section of our website is dedicated to the Industrial Incentives, and here you can find necessary information about them.
The Nigerian Government offers several incentives that are geared at encouraging indigenous manufacturers and are a way of promoting exportations. They are:
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- Manufacture – in – Bond – Scheme (MIBS)/ Export Expansion Grant Scheme (EEG)/ Bonafide Manufacturers/ Assemblers (BMA)
- Free Trade Zones/ Export Processing Zones & Oil and Gas free Zones
Manufacture – in – Bond Scheme (MIBS): Definition
This scheme is designed to encourage manufacturers to import duty free raw material inputs and other intermediate products whether prohibited or not for the production of goods for export, backed by a Bond issued by any recognized Commercial Bank, Merchant Bank, Insurance Company or Nigerian Export-Import (NEXIM) Bank. The Bond will be discharged after evidence of exportation and repatriation of foreign proceed has been produced.
Manufacture – in – Bond Scheme (MIBS): Guidelines
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- The Manufacture-in-Bond Scheme (MIBS) shall be applicable to export manufactures only.
- Interested manufacturers shall apply to the Federal Ministry of Finance using the prescribed forms.
- For a manufacturer to enjoy the scheme, the factory premises must be approved for that purpose by the Nigeria Customs Service.
- Approval including the Import Requirement Certificate (IRC) should be obtained within a period of two months and transmitted to the Nigeria Customs Service for implementation.
- The Nigeria Customs Service will determine acceptable guarantee Bond issued by Commercial or Merchant Banks or NEXIM or Insurance Companies covering not less than 110 per cent customs duty payable on each consignment.
- Under this scheme manufacturers of export commodities will be entitled to import duty-free raw material inputs. CKD and intermediate inputs whether prohibited or not for the manufacturer or export goods.
- The Manufacture-in-Bond Scheme shall operate on annual 12 calendar months importation basis as the exporter wishes. For prohibited items, however, the scheme shall operate on Import-by-Import basis.
- The Bond, which shall be effective from the date of its issuance by the Bank, shall be discharged when the conditions stipulated therein have been fulfilled.
- The Nigeria Customs Service will periodically monitor the utilizations of raw materials imported under this scheme until the Bond is fully executed.
- In the event of inability to any manufacturer to fulfill the conditions stipulated in the Bond, the manufacturer should apply to the Nigeria Customs Service through the approved guarantor for an extension of the Bond particularly when the life of the Bond has expired. The extension of the Bond shall not exceed three months.
- Repatriation of the foreign exchange realized from the transaction shall be confirmed by the Central Bank of Nigeria before the Bond is discharged.
- Single Goods Declaration Form (SGD Form C.2010) marked “Manufacture-in-Bond Scheme” shall be used for the clearance of goods under the scheme.
- A committee comprising of the representatives of the Ministry of Finance, Nigeria Customs Service, Nigerian Export Promotion Council, Standards Organization of Nigeria and the Central Bank of Nigeria shall monitor the scheme. The monitoring body shall render a quarterly Report to the NMIBS Committee.
- In the event of default by the Manufacturer, Nigeria Customs Service shall redeem the Bond by calling on the guarantor to pay up the appropriate customs duties and other associated charges.
- In the case of liquidation the Company may be allowed to sell the goods in the local market with the approval of the Honourable Minister of Finance on condition that the appropriate customs duty and other associated charges shall be paid.
- A manufacturer participating in the Manufacture-in-Bond Scheme is expected to designate a warehouse or store in his factory premises for the storage of inputs and finished goods.
- Clean Report of Inspection (CRI), Form “M” and other relevant documents for this scheme shall be clearly marked “MIB Scheme”.
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Guidelines for Redesigned Export Expansion Grant Scheme
Preamble
The Export Expansion Grant Scheme is a very vital incentive required for the stimulation of export oriented activities that will lead to significant growth of the non-oil export sector.The Federal Government is committed in its efforts to bring about tremendous growth in non-oil exports, resolved to enhance efficiency, transparency and accountability in the administration of the key incentive for non-oil export development. The “Export Expansion Grant (EEG)” is a policy tool to further this objective. The use of incentives supports the NEEDS objective of mainstreaming businesses that are currently operating in the informal sector. It is also in line with the NEEDS requirements that companies desiring to receive benefits from the government will have to comply with the laws of the country. The government in reviewing the scheme sets out the following guidelines below.
Guidelines
1. Incentive Rate
The Scheme would operate the “Weighted Eligibility Criteria” in assessing applications for EEG. The baseline data as supplied by individual applicant-company would be used for its assessment. Thus the method of assessment is “company specific”. A company’s EEG assessment would be conducted once yearly and the determined rate will apply throughout the year.
The Weighted Eligibility Criteria has four bands: 30%, 20%, 10% and 5%. The following template will be used in assessing the incentive rate for every EEG applicant.
| Eligibility Criteria | Company Data | Threshold | Weight | Company Score |
| Local value added | 25% | |||
| Local content | 20% | |||
| Employment (Nigerians) | 20% | |||
| Priority sector | 10% | |||
| Export growth | 20% | |||
| Capital Investment growth | 5% | |||
| Weight | 100% |
A new entrant into the EEG Scheme shall provide prior period financial statement or where applicable an investment plan for its assessment.
2. Eligibility
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- Exporter must be registered with the Nigeria Export Promotion Council (NEPC).
- Eligible exporter shall be a manufacturer producer or merchant of products of Nigerian origin for the export market (i.e. the products must be made in Nigeria).
- An exporter must have a minimum annual export turnover of =N=5 million and evidence of repatriation of proceeds of exports.
- Exporter-company shall submit its baseline data which includes Audited Financial Statement and information on operational capacity to NEPC.
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3. Validity for EEG Application
Qualifying export transaction must have the proceeds fully repatriated within 180 days, calculated from the date of export.
4. Documentation
All applications for Export Expansion Grant (EEG) must be completed in three copies to be circulated to Nigeria Export Promotion Council (NEPC), Central Bank of Nigeria (CBN) and Nigeria Customs Service (NCS) with the following documents:
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- NEPC Export Certificate
- Clean Certificate of Inspection (CCI) to include quality certification
- Forms NXP duly certified by processing bank, Nigeria Customs Service and the Pre-shipment Inspection Agents
- Single Goods Declaration (SGD) Forms, duly endorsed by Nigeria Customs Service, both at front and back
- Final Commercial Invoice
- Bill of Lading
- Evidence of full repatriation of export proceeds (CBN confirmation of repatriation of proceeds by exporter)
- Certificate of Manufacture
- Any other documentation as may be required by NEPC from time to time
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5. Negotiable Duty Credit Certificate (NDCC)
The NDCC shall be used for the payments of import duties only.
6. Company Visits
Company visits shall be incorporated into a programme for validation of information submitted by the exporters and impact assessment of the scheme. The programme will include a first visit to validate financial as well as operational information at least once a year and as may be required.Impact assessment of the scheme on the economy of Nigeria shall be carried out annually by external consultants, as may be determined by the Honourable Minister of Finance.
7. Implementation Committee
The Implementation Committee will consist of:
(1) Nigeria Export Promotion Council (NEPC)
(2) Federal Ministry of Finance (FMF)
(3) Nigeria Customs Service (NCS)
(4) Central Bank of Nigeria (CBN)
(5) Federal Ministry of Commerce
(6) Federal Ministry of Industry
(7) Special Adviser to the President (Manufacturers and Private Sector)
The implementation Committee shall meet monthly to consider processed applications and make recommendations to the Honourable Minister of Finance for approval, and subsequent issuance of NDCC by NEPC.
8. Inter-Ministerial Committee
There shall be an inter-ministerial Committee to review the activities of EEG Scheme. The Committee shall meet twice a year. Membership includes all members of the Implementation Committee and representatives of the Ministry of Agriculture, Trade Malpractice Committee and Economic and Financial Crime Commission (EFCC).
9. Administration of EEG
The EEG Scheme shall be domiciled in NEPC and administered in conjunction with the Implementation Committee. The list of applications to whom NDCC have been issued shall be forwarded to the Federal Ministries of Finance and Commerce monthly.
10. Outstanding Claims
All outstanding claims in respect of transactions between the suspension of the scheme and its subsequent lifting will be processed under the old EEG Scheme Rate (i.e. exports made with Bill of lading dated on or before the 31-st of December, 2004).
11. Violation of Guidelines
Any violation of these guidelines by any claimants shall be handled by the Presidential Committee on Trade Malpractices and the Economic and Financial Crimes Commission in conjunction with members of the Implementation Committee.
12. Effective Date
These guidelines take effect from the 1-st of January, 2005.
NOTE:
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- EXPORT CERTIFICATE is required on each consignment for all categories of export whether or not an exporter is eligible for the Export Expansion Grant. The certificate is obtainable from NEPC offices throughout the federation.
- FREE OF CHARGE (upon the submission of the pre-shipment documents)
- Application processing fee is hereby abolished.
- Double dipping into government industrial incentives will not be allowed (i.e beneficiaries of EEG are prohibited from enjoying other industrial incentives, e.g. Manufacturers Export In-Bond Scheme).
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Export Processing Zones & Export Processing Factories: Oil & Gas Free Zone
The Free Port System
A Free Port is an enclosed area near to, or forming part of a seaport or airport, in which imported goods can be stored without payment of customs duty or taxes. These are only paid if the goods are delivered from the Free Port for consumption in the country in which the Free Port is situated.
If the goods are exported from the free port to another country, no Customs duty or taxes are payable. This avoids the onerous Customs legislation covering bonded warehouses and the procedures for claiming drawback or refunds of duty previously paid. Free Ports enable exporters to build up buffer stocks at the port or airport of loading, thus avoiding the need to use their own warehousing and the double handling involved. It is important to note at this stage, that legislation governing the operation of the Free Ports specifically excludes assembly and processes of manufacture. Permissible operations are limited to unpacking/repacking, sorting, grading, sampling and labeling etc., processes which do not alter the essential nature or state of the imported article.
Establishment of the Onne Oil & Gas Free Zone
The Onne/Ikpokiri area of Rivers State was declared as an Oil & Gas Free Zone by Decree No. 8, which was published in Nigerian Government Gazette No. 12 of the 29th of March 1996. In terms of the Decree, Free Port Licenses are only issued to operators in the Oil and Gas related industries. This enables companies operating in those industries to use the Onne Free Port as a Distribution Center for their Nigerian and West African activities.
Attractions
To encourage potential investors to set up manufacturing operations in the Onne Free Zone, the Nigerian Government Decree provides the following incentives for approved enterprises. Nigerian taxes, levies, duties and foreign exchange regulations will not apply in the Free Zone. Repatriation of foreign capital investment in the Free Zone is permitted at any time with the capital appreciation of the investment. Profits and dividends earned by foreign investors in the Free Zone may be remitted overseas at any time. No import or export licenses are required. Up to 100% foreign ownership of the business in the Free Zone is permitted. Companies operating in the Free Zone may employ foreign management and other qualified personnel.
Free Port Licences
Free Port Licences will only be granted to Companies, which operate in the Oil, and Gas related industries and area registered with the Department of Petroleum Resources (DPR). Two types of license will be issued depending on the legal status of the applicant:
- Special Licences
Special licences are granted to companies who are legally established and incorporated outside Nigeria. However, business can be undertaken and sales made in Nigeria through subsidiaries, appointed agents or distributors. A company with a special licence is also allowed to purchase goods or services from Nigeria. - General Licences
General licences are granted to companies already holding to the Registrar of Companies in Nigeria and a permit issue valid Certificate of Incorporation from the DPR allowing the company to operate as an Oil and Gas Service company. Activities similar to those allowed by the companies existing permit will be authorized under the General licence.
Export Processing Zones & Export Processing Factories: Negotiable Duty Credit Certificates (NDCC)
The Negotiable Duty Credit Certificates (NDCC) are an alternative to cash payment of export incentive claim under the Manufacture-in-Bond Scheme and can be used to settle import duty payment due to Government by the beneficiary of the Certificate. The Certificate is jointly issued and signed by the Nigeria Export Promotion Council and the Federal Ministry of Finance on behalf of the New Manufacture-in-Bond Scheme Committee in respect of the incentive claims relating to Duty Drawback Scheme (DDS), Export Expansion Grant (EEG) and the Export Development Fund (EDF) Schemes.
Procedure
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- Any holder or beneficiary of the Certificate can use it for his/ her benefit or negotiate it with other interested parties on mutually agreed terms.
- Where import duty is with NDCC designated banks are required to issue separate receipts with indication “for NDCC PAYMENT” stated therein to distinguish it from import duty receipts issued for Bank Cheque/ Drafts.
- The collecting bank shall forward the duplicate (Pink Cover) of the Certificate with a copy of the receipt and pay-in-slip to the Nigeria Customs Service as per method of the Cash-backed payments while the triplicate (white copy) will be forwarded to the office of the Accountant General of the Federation.
- A copy of the receipt shall be issued by the Processing bank to the holder or beneficiary of the Certificate.
- The collecting bank shall, thereafter, submit the original duly batched to the Assistant Director, Trade & Exchange Department Central Bank of Nigeria when making weekly returns and retain a photocopy for its records. Such returns shall be made on the Monday following the reporting week. For the avoidance of doubt separate returns shall be rendered for cash backed and NDCC Import Duty Payments.
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Transferability
All authorized dealers are to note that as a negotiable instrument the certificate is transferable by special endorsement to the transferee as mutually agreed between both parties. However, a certificate is subject to three (3) transfers, with each transfer counter endorsed by an authorized signatory of the Nigeria Export Promotion Council (NEPC).
The designated banks are required to play the role of Intermediation to facilitate the operation of the Scheme.
Utilised Balance
In case of partial utilization, the collecting bank shall indicate the unutilized balance on the face of all copies of the certificate as well as on a photocopy of the original, which shall be handed over to the holder. Upon presentation to NEPC, the holder shall be issued with the outstanding value using specific denomination(s) for the unutilized balance.
Commission
A maximum of 50k (fifty kobo) per =N=1,000.00 (one thousand naira) only shall be payable by the beneficiary or holder of the certificate to the designated bank as administration charge on the utilized value of the certificate.
For Further Information, please contact:
The Assistant Comptroller-General (Excise & Industrial Incentives)
NIGERIA CUSTOMS SERVICE HEADQUARTERS,
ABIDJAN STREET, P.M.B. 26, ZONE 3, WUSE, ABUJA.
TEL/FAX: +234 09 523 4694
Export Processing Zones & Export Processing Factories: Pre-Shipment Agents
The Chief Liaison Officer
COTECNA INSPECTION LIMITED
4TH Floor, Marble House,
1 kingsway Road,
Ikoyi, Lagos Nigeria
Tel.: 2692648, 2692649, 2695340
Fax.: 2690985
Telex: 28643 Cotins-ng
The Manager Operations.,
GOBAL SCAN The Contract Manager
S.G.S. SOCIETE GENERALE DE SURVEILLANCE, S. A
GLOBAL TRADE SOLUTIONS
Liaison Office Intercontinental Plaza
999 C Danmole Street, 4th Floor
M.B. 800048, Lagos Nigeria
Tel.: 611188, 610792, 2625347-50
Fax.: 2623042
E-Mail: nglagoslo@2sgsgroup.com
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