1.0     Introduction

The Federal Ministry of Finance is responsible for the administration of Fiscal Incentives i.e. issuance of Import Duty Exemption Certificate (IDEC) for items exempted from the payment of duties, levies and other forms of taxes which are in accordance with the provisions of extant relevant statutes and International Agreements or Protocols.

The lists of existing items for which fiscal incentives are granted by the Ministry are as follows:

1.         Goods obtained free as technical assistance from donor international bodies/countries.

2.         Life Saving Appliances.

3.         Military Hardware and Uniforms

(a)   All hardware imported officially for the use of the Nigerian Army, the Nigerian Navy or the Nigerian Air Force (other than alcoholic and non-alcoholic drinks, tobacco goods and products of food industry and as appropriate, any parts of such goods).

(b)  Accoutrements and Uniforms, the property of Officers of the Nigerian Army, the Nigerian Navy,  the Nigerian Air Force, Nigerian Police, Nigeria Customs Service and other para-military services imported by such officers for their PERSONAL USE ON DUTY as required by the regulations of their respective services.

4.         Arms and Ammunition imported by the Nigeria Police Force, Nigeria Customs Service and other  para-military services.

5.      All machinery imported by industrial establishment engaged in the exploration, re-injection, processing and power generation through the utilization of Nigerian natural gas for their operations

6.       All shipment of materials, machineries, plant, materials and equipment for the Nigeria LNG Project are exempted from payment of import duty, Value-Added Tax, Pre-shipment inspection and other port charges

7.       LNG Company and its Contractors/Sub-contractors are exempt from the payment of import duties and other duties, including but not limited, to port surcharges in respect of necessary imports on plant, machinery, equipment and materials for use in the construction of/or incorporation in plant, jetties, shipping, transmission facilities and all ancillary works in the company’s operations

8.     All Approved Enterprises within the Export Free Zone are exempted from all Federal, State and Local Government Taxes, Levies and Rates. Furthermore, the Authority and any approved Enterprise shall be entitled to import into the Export Free Zone, free of customs duty any capital goods, consumer goods, raw materials, components or articles intended to be used for the purposes of and in connection with an approved activity, including any article for the construction, alteration, reconstruction, extension or repair of premises in the Export Free Zone or for equipping such premises

9.     All operators in the mining industry are exemption from payment of customs and import duties in respect of plant, machinery, equipment and accessories imported specifically and exclusively for mining operations subject to the approval of the appropriate plant, machinery, equipment and accessories by the Mines Inspectorate Department

10.    All Infrastructural and Social Support Programmes under the World Bank, ADB and other Multilateral Institutions for Assisted States Water, Health, Urban Renewal and Agricultural Projects and other Priority Projects where the Contract Agreement did not include the cost of Import Duties shall be exempted from payment of import duties

11.    All government officials who spend at least six months abroad on official assignment are entitled to concessionary rebate of 50% on personal car and duty exempt in respect of their personal effects.

12.    All Machineries and Equipment under Chapters 84, 85 and 90 of the Common External Tariff (CET) for Agriculture, Cement, Hospitality, Iron and Steel (Cold-Rolled), and Textile Industries and Chapter 88 for Aviation are exempted from payment of import duty

13.    The following activities are also exempted from the payment of VAT

Goods Exempt

1.       All medical and pharmaceutical products.

2.       Basic foods items.

3.       Books and educational materials.

4.       Baby products.

5.       Fertilizer, locally produced Agricultural and veterinary medicine, farming machinery and farming transportation equipment

7.       Plant and machinery imported for use in the Export Processing zone

8.       All exports

9.       Plant and machinery imported for use in the Export Processing Zone or Free Trade Zone.

10.    Plant, machinery and equipment purchased for utilization of gas in downstream petroleum operations.

11.    Tractors, Ploughs, agricultural equipment and implements purchased for agricultural purposes.

Services Exempt

1.       Medical services

2.       Services rendered by community Banks, People Banks and Mortgage institutions.

3.       Plays and performances conducted by educational institutions as part of learning.

4.       All exported services

2.0.  General Conditions to Be Fulfilled

          All requests for exemption from payment of Import Duty shall be accompanied by the following documentation:

i)              Proforma Invoice indicating quantity, value and description of items;

ii)            Bill of Lading/Airway Bill;

iii)          Comprehensive list of items to be imported;

iv)          Letter of donation (where applicable);

v)            Certificate of Registration (where applicable);

vi)          Contract Agreement (Where applicable);

vii)        Shipping Manifest (where applicable)

viii)      List of imported items must be endorsed/certified and authenticated by the applicant/beneficiary.



3.0     Specific Conditions for Donations, Diplomatic Importation and Other Requests

All requests in respect of donated items by International Organisations, Countries or Bodies, such applicants or beneficiary (recipient of the donated item), shall in addition to the General Conditions specified above, comply with the following requirement:

i)              Since all International Donor Countries, Agencies and Organisations had signed Working Agreement with the National Planning Commission, all requests from such donors must be accompanied with the Agreement;

ii)            All requests from Christian Organisations should be forwarded to this Ministry through the Christian Association of Nigeria (CAN) or any relevant supervisory body;

iii)          All requests from Islamic Organisations should be channeled through the Jama’atu Nasrul Islam (JNI) or other relevant supervisory body;

iv)          All potential applicants that are Non-Governmental/Voluntary Organisations must submit certification of such registration obtainable from the National Planning Commission;

v)            The recipient must be technically qualified to receive donation.  Where the applicant or recipient is an NGO, such must be a non-profit organization duly registered by the Corporate Affairs Commission under the Land Perpetual Act  (Part C) Provision of the Companies and Allied Matters Decree (this section clearly define whether the organization is a limited liability company for commercial purposes or a non-profit organization);

vi)          All requests for exemption in respect of Drugs whether donated or otherwise must be accompanied by certification of the Federal Ministry of Health regarding the safety of its usage in Nigeria;

vii)        Organizations registered as Limited Liability are not qualified to receive donation and therefore not qualified for Duty Exemption;

viii)      Certificate of donation from the donor to the recipient will indicate that the goods are actually donated;

ix)          Bill of Lading/Airway Bill – this will indicate the donor as the “Shipper” while the recipient is given as “Consignee”.  Under normal circumstances, the “Shipper” and the “Consignee” are not the same.  When this happens, the application appears fraudulent which can then be rejected. Exemption to this provision is when such organization have international spread such that the parent body donate to its local partner in Nigeria for instance, International Planned Parenthood Federation, Red Cross, Rotary, Society for Family Health, Africare etc.;

x)            The applicant (recipient) must provide an explanation on the mode of utilizing the donated goods for the benefit of Nigerians in its immediate area of focus;

3.2   Specific Conditions In Respect of Gas Utilization Projects (Upstream & Downstream), Fertiliser, Cement, Textile and Power

i)              Gas Sale and Purchase Agreement between supplier and consumer (applicable to companies converting to the use of Natural Gas to power machineries for their operations (fertilizer, Gas-Based Power Plants etc);

ii)            NNPC’s approval for the Award of Contract in respect of new gas projects by major oil and gas company e.g. Chevron, Elf, NAOC, Shell and ExxonMobil etc (applicable to Upstream only);

iii)          NNPC to confirm cost of duty payment in respect of imported machinery and equipment for gas development has not been included in recovered whether in respect of JV & PSC Gas Projects

iv)          Contract Agreement between the oil company and its contractors (applicable) to new gas projects in the Upstream);

v)            Seek the confirmation of the Gas Supply and Purchase Commitment from the existing Gas Suppliers (Nigerian Gas Company, Shell Nigeria Company etc) applicable to gas;

vi)          Statement on the proposed utilization of the gas purchased. Company must explain the quantity of the Gas to be consumed, level of power to be generated (in Watts, Kilowatts, Megawatts etc);

vii)        For companies converting their operations to run on natural gas or use gas to generate power whether for Stand Alone Power Projects or for National Grid, shall state cost and benefit of their current status as compared with the post conversion/project period. These Key Performance Indicators is also applicable to the other applicants (Cement. Hospitality, Iron & Steel (Cold-Rolled), Agriculture and Textile):

a.              Level of capacity before incentivecompared withlevel of capacity after incentive;

b.             Level of turnover before incentive compared with level of turnover after incentive;

c.              Level of Profitability before incentive against Level of Profitability after;

d.             Level of Tax commitment before incentive versus Level of Tax commitment after;

e.              Level of actual tax payment before incentive versus Level of potential tax payment after;

f.              Level of direct and indirect employment before and after incentive.

3.3   Specific Conditions In Respect of World Bank, ADB. and Multilateral Institutions’

Assisted State Health, Water, Agricultural, Educational Etc. Projects

In addition to General Requirement, all requests for Sectoral Development Assisted Projects of the World Bank, ADB. and Multilateral Institutions’ for State Assisted Health, Water/Sanitation, Agriculture, Education etc, shall be accompanied with the following additional documentation:

i)              Signed Loan Agreement between the State and the Multilateral Institution supporting the project;

ii)        Contract Agreement between the State Government and the Contractor handling the Project.  This will show whether the project is actually World Bank /ADB Assisted as claimed or is a direct purchase by the applicant which renders the application liable for rejection;

iii)          The Contract Agreement will enable the office determine whether the cost of Import Duty is included in the total contract sum.

3.4   Specific Conditions for Public Officers Returning from Missions/Educational Tour

In addition to the General Requirement, all requests for Duty Rebate by Foreign Affairs Staff/Other Public Officers returning from Foreign Missions or Educational Tour shall fulfill the following additional criteria:

i)              Copy of Stamped Passport of Applicant;

ii)            Copy of the Entry visa to show that the applicant was actually out of the Country;

iii)          Officer must have stayed for a minimum period of six (6) months;

iv)          Officer must be finally returning back to Nigeria

4.0     Conditions on the Utilisation of the Approved Exemption Certificate

i)              The resultant Import Duty Exemption Certificate granted upon approval of the Honourable Minister of Finance shall be valid for a period of one (1) calendar year. The effective date of the resultant certificate should be the date of arrival of the items (as provided in the Way Bill/Bill of Lading);

ii)            The resultant certificate should be fully utilized to import and clear the items within the one (1) year validity period. The Office should be notified immediately a beneficiary notices that due to some unforeseen challenges, the items so approved cannot be fully imported within the time frame which will then trigger requests for revalidation.

iii)          All requests for revalidation must be accompanied with evidence of utilization i.e. Jacking List duly entered and stamped by the Customs Service, List of Outstanding Items to be imported and full statement on why the incentive could not be fully utilized within the validity period of the Certificate.

iv)          Also, in the event of request for revalidation, applicants should ensure that the outstanding list of items to be imported should be consistent with the original list subject to reduction in value and quantity;

v)            All Import Duty Exemption Certificates issued would be monitored on quarterly basis to ensure that the deliverables indicated prior to the approval have been met.



Refunds of import duty to importers often arise as a result of three (3) obvious reasons as well as some less obvious ones. Main factors are:-

i)       Importers who are technically qualified as beneficiary of import duty exemption certificate but compelled to pay duty on the imported items having stayed at the ports while awaiting for the resultant IDEC to be issued. In such cases, the beneficiary could make request for refunds after having been issued with the IDEC and that the items had arrived within the validity period of the IDEC;

ii)      Customs duties are assessed and paid to customs area commands (Ports) where goods have been imported. An importer whose goods were destined for example Apapa must have been assessed by Apapa Command and the resultant duty payable is paid to the Command. However, when same imports are diverted to Tin Can Port due to unforeseen reasons, the importer is thus required to pay duty now assessed by Tin Can Command, thereby paying such duty twice. The importer is thus qualified to seek for refunds of the duty earlier paid.

iii)     Where customs duty have been assessed and paid by an importer but the items could not be imported as the transaction was cancelled by either of the parties involved, the duty already paid is therefore refundable.

5.1   General Conditions to Be Fulfilled

i)       All requests for refunds of import duty must be initiated from the Customs Area Commands where the duty been reclaimed has been paid. This will then be forwarded to the Customs Headquarters where an In-House Committee of the NCS would review such claims and where confirmed in line with the customs guidelines for refunds, the Committee’s recommendation is further commended by the Comptroller-General of the NCS for the consideration and approval of the Minister of Finance;

ii)      The Customs recommendation is forwarded with the relevant file of the transaction wherein the following documentation must be found:-

a)      Customs Pay-in forms indicating the actual amount paid;

b)      Customs Payment Receipt to confirm actual payment made this also indicates the          Collecting Bank through which the payment was made;

c)      Bill of Lading and Clean Report of Inspection (CRI) will indicate the         arrival date of the items (whether the items arrive within the validity period of the certificate in the case where the applicant was issued with IDEC);

d)      Copy of Form ‘M’ indicative of the genuineness of the transaction;

e)      Letter of Credits opened where applicable;

f)       The Bill of Lading, Form ‘M’ and Shipping Manifest will confirm the description and value of item as well as amount of duty payable on the transaction.

iii)     Upon the receipt of the recommendation from the Nigeria Customs Service, there is need to:-

a)      Verify that the applicant was actually granted IDEC if applicable;

b)      Ascertain the reason why duty was paid while IDEC has been issued by cross    checking the dates of IDEC application, approval and effective date of the IDEC;

c)      in cases of refunds due to an earlier IDEC, only the cost for duty and VAT paid are calculated as amount refundable given that only these two are usually conceded under normal circumstance while payments for 7% Surcharges, Fees and other levies are paid even with an IDEC,

          d)      The Central Bank of Nigeria is then requested to confirm whether such payments as claimed by the applicant have been made through the account of the Designated Collecting Bank;

e)      In cases of refunds claim arising from excess duty payment, verify the applicable tariff classification

iv)     The amount actually paid reflected in the CBN’s confirmation should be lower than claimed as the collecting bank through which the duty was paid must have deducted its Commission of 2 per cent COT since it has provided service by collecting from the importer and remitting to the CBN.

v.              Having satisfied the eligibility criteria, request is recommended for the Honourable Minister of Finance’s consideration and approval;

vi.      Upon the Ministerial approval, the letter conveying such approvals would be sent to the Office of the Accountant General of the Federation to effect payment in favour of the beneficiary.

6.0     Processing fees

6.1    Currently, the Federal Ministry of Finance does not charge fees for processing these incentives as provided by existing Statutes.