CIT and Customs Duties: Exploring the Interaction Between Import Duties and Income Tax in Nigeria.



Nigeria’s economy relies significantly on international trade, making customs duties a vital source of revenue for the government. On the other hand, the Companies Income Tax (CIT) Act is a fundamental component of Nigeria’s tax framework, regulating the taxation of corporate entities operating within the country. This article aims to shed light on the interplay between customs duties and income tax in Nigeria, particularly how imports and international trade impact the tax obligations of businesses.

Understanding Customs Duties:

Customs duties, often referred to as import duties, are taxes levied on goods imported into Nigeria. They serve multiple purposes, including generating revenue for the government, protecting domestic industries and regulating trade. Key points to consider regarding customs duties include:

  1. Types of Customs Duties: There are various types of customs duties, including basic customs duty, value-added tax (VAT) on imports, and specific duties on certain goods.
  2. Importation Regulations: Importers are required to comply with importation regulations, including obtaining relevant permits, providing accurate declarations and paying the appropriate duties.
  3. Exemptions and Concessions: Some goods may be exempt from customs duties or qualify for concessions, depending on factors such as their nature, intended use and the trade agreements in place.
  4. Customs Documentation: Proper documentation and record-keeping are essential for customs compliance and audit purposes.

Interaction with CIT:

Customs duties can have a significant impact on a company’s financial performance, which in turn affects its CIT obligations. Here’s how customs duties and CIT interact:

  1. Import Costs: Import duties and taxes paid on imported goods increase the cost of raw materials, components or finished products. These costs can impact the company’s profitability and taxable income.
  2. Customs Valuation: The value of imported goods for customs purposes can differ from their accounting or financial reporting value. This can lead to adjustments in the financial statements, affecting the calculation of taxable income.
  3. Customs Compliance Costs: Expenses related to customs compliance, such as customs brokerage and administrative costs, may not be directly deductible for CIT purposes. Careful consideration is needed to determine their tax treatment.
  4. Customs Duties and Deductions: Certain customs duties and taxes paid may be eligible for deductions or credits under the CIT Act, particularly if they are directly related to the production or business operations.

Tax Planning and Compliance:

To effectively manage customs duties and CIT obligations, businesses engaged in international trade should:

  1. Integrate Tax and Customs Planning: Coordinate tax and customs planning to optimize tax positions and minimize the impact of import costs on CIT liabilities.
  2. Document Transactions: Maintain accurate records and documentation for both customs and tax compliance, ensuring consistency between customs declarations and financial statements.
  3. Leverage Tax Incentives: Explore available tax incentives and exemptions, including those related to specific industries or activities.
  4. Engage Experts: Consult tax and customs experts with experience in international trade to navigate the complexities effectively.


Customs duties and income tax are intertwined aspects of doing business in Nigeria, particularly for companies engaged in international trade. Understanding the interaction between customs duties and CIT is crucial for accurate financial planning, tax compliance and overall business success. By integrating customs and tax strategies, businesses can navigate the complexities of importation while optimizing their tax positions within the framework of the CIT Act.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.