Nigeria’s tokumbo imports plunge 83% amid new tax policies

Nigeria’s import bill for used vehicles, commonly referred to as tokumbo, has seen a dramatic decline of 83% year-on-year, dropping to ₦138.62 billion in the first half of 2024 (H1’24) from ₦819.15 billion during the same period in 2023 (H1’23).

According to the National Bureau of Statistics (NBS) report on Commodity Price Indices and Terms of Trade (ToT), there were no imports of used vehicles in the first quarter of 2024 (Q1’24), compared to ₦69.23 billion worth of used vehicles imported in Q1’23. In the second quarter (Q2’24), the value of imported used vehicles stood at ₦138.62 billion, reflecting an 81.5% decline year-on-year from ₦749.92 billion in Q2’23.

The NBS noted that most of the used vehicles were imported from the United States, with total imports from America reaching ₦971.84 billion in Q2’24.

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This significant drop follows the introduction of a new tax regime by the federal government last year. Under the new regulations, vehicles with engine capacities between 2.0 and 3.9 liters are subjected to an Import Adjustment Tax (IAT) of 2% of the vehicle’s value, while those with engine capacities of 4 liters and above face a 4% IAT. This levy is in addition to the existing 35% import duty and 35% levy imposed on vehicle importers.

Exemptions from the IAT levy apply to vehicles with engine capacities below 2,000cc, mass transit buses, electric vehicles, and locally manufactured vehicles. Furthermore, the government has updated its import prohibition list to include used motor vehicles older than 12 years from their year of manufacture.

In March 2024, the Nigeria Customs Service (NCS) announced a suspension of the 25% import duty penalty on improperly imported vehicles, a move that may impact future import trends in the country.