A group of Nigerian motor dealers is calling for a probe into one of their competitors who they say used letters of credit (L/Cs) to avoid paying recent increases in duty on imported vehicles.

Nigeria's Auto Manufacturers' Representatives Group (AMRG), allege that Stallion Group must have known that the government was about to raise rates of duty on imported vehicles before the official announcement.

New policy

The Nigerian government made public its new automotive policy on 2 October 2013 and set 3 October 2013 as the deadline for the filing of official documentation to import under the old tariff regime until 28 February 2014.

Until 2 October 2013, the duty on fully built passenger cars was between 20 and 35 per cent, while a 10 per cent flat rate was imposed on commercial vehicles.

L/C arrangements

To encourage local motor vehicle manufacturing, the new automotive policy increased the duty to 70 per cent on passenger vehicles and 30 per cent for commercial vehicles.

The new legislation specified that L/Cs opened after 3 October 2013 would reflect the new rate of duty, while L/Cs opened before 3 October 2013 would attract the old duty until February 28, 2014.

Allegations

The AMRG alleges that Stallion Group, which imports Honda, Nissan, Hyundai, Volkswagen, Audi and other vehicle marques into the country, had prior warning of the details of the automotive policy and used it to its advantage.

The group says that the Stallion Group opened L/Cs worth US$382 million to cover three years of imports for 20,000 cars.

Probe calls

The L/Cs were opened with five banks on 2 October 2013 to beat the new tariff regime contained in the automotive policy alleges the group.

It has called on the federal government to probe Stallion Group for allegedly evading the proposed duty increase by opening L/Cs and ordering vehicles above its annual average import bill of around US$100 million.

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