In August 2020, the Central Bank of Nigeria (CBN) issued a circular titled "Destination Payment for all Forms M, Letters of credit and other forms of payment" (the 2020 Circular) directing all Authorised Dealer Banks (ADBs) to open Form Ms for Nigerian businesses only where payments for imported goods or services are directly in favour of the ultimate supplier. ADBs were to desist from opening Form Ms where imports are through buying agents i.e. procurement companies. The 2020 Circular also introduced a Product Price Verification Mechanism (PPVM) to forestall over-pricing and/or mispricing of goods imported into the country.
The CBN issued this circular to manage the demand on the nation's Foreign Exchange (FOREX) reserve and introduce a platform to ascertain quoted prices before Form Ms are approved.
Following the release of the 2020 Circular, there was significant pushback by companies involved in importing of goods from procurement companies. Our article of 8 September 2020 examined the economic and commercial rational for having such procurement arrangements. Also, there was uncertainty as to how the PPVM would operate.
To provide further guidance, the CBN in January 2022 issued the "Guidelines on the introduction of e-Evaluator, e-Invoicing for import and export in Nigeria" (the Guidelines). In this article, we review the Guidelines, its impact on stakeholders and suggest ways to address the issues identified by stakeholders.
Details of the Guidelines
The Guidelines informed stakeholders of the introduction of the e-Valuator and e-Invoice, which would replace the hard copy invoice and become a necessary supporting document for all import and export transactions with effect from 1 February 2022.
The e-Invoice, upon authentication by the ADBs, would be submitted on the Nigeria Single Window portal - Trade Monitoring System (TRMS). The TRMS will operate on a Global Price Verification Mechanism, guided by a benchmark price of goods and services in the market where the goods are traded, to ensure that the invoiced prices are based on spot market prices at the time of invoicing.
Imports and exports with prices more than 2.5% of the verified prices will be queried and will not be approved for either Form M or Form NXP. The aim of this system is to achieve accurate value of import and export items in and out of Nigeria.
Importers and exporters of goods and services into and out of Nigeria are required to register on CBN's dedicated electronic portal operated by CBN's appointed service provider. Upon successful registration and authentication, a verification report and digital certificate will be issued to the importer/exporter, which is valid for one (1) year. An annual subscription fee of $350 will be charged per authentication of suppliers on the system.
It is interesting to note that the Guidelines makes reference to suppliers and did not specifically exempt invoices from procurement companies as stated in the 2020 Circular. This could be an indication that the CBN has taken into consideration the objections raised by stakeholders.
Exemptions
The following transactions are exempt from submitting e-invoices:
- Individual invoice with values less than USD 10,000 or its equivalent in another currency. However, where the annual cumulative invoice value issued by a supplier/service provider is USD 500,000 or more, such a supplier would be required to submit e-invoices regardless of the individual invoice values.
- Import or export transactions carried out by security agencies in the country.
- Supplies to diplomatic and consular missions and supplies to international agencies dependent on the United Nations.
- Donations made by foreign governments or international organisations to foundations, charities and recognised humanitarian agencies
- Goods directly supplied by a foreign government
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
