CBN Circulars & Publications | |
CBN Circulars & Publications | |
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Monday, November 23, 2020 / 03:00PM / By Deloitte / Header
Image Credit: Premium Times Nigeria
The
Central Bank of Nigeria (CBN) has issued a circular ("the Clarification
Circular") to clarify the meaning of the term 'ultimate supplier', which was
used in a recent circular (2the Circular) directing Authorised Banks to
discontinue the process of opening Forms M for Nigerian importers if payments
are routed through buying companies. Please refer to our earlier alert.
In
the Clarification circular dated 18 November 2020, the
CBN noted that due to the differing interpretations of 'ultimate supplier', it
had become important to clarify the meaning of the term. On this basis, the CBN
clarified the term 'ultimate supplier' to mean "the direct party selling the
goods to the importer irrespective of whether that party is the manufacturer or
internationally recognized buying company/supplier/agent".
The CBN also noted that when preparing the documentation for an import transaction, the name of the 'ultimate supplier' of the products must be the same as the name of the payment beneficiary and must indeed be the party receiving payment. Furthermore, where it is imperative that an importer uses a buying company, the importer shall obtain the approval of CBN. An application for approval should include the following documents:
Authorised
Dealers are also required to authenticate the information in the documents
above.
The
Clarification Circular is a welcome development for the business environment,
as it aligns with the business models of many offshore manufacturers who only
sell to Nigerian consumers through agents. It will also address the concerns of
some Importers who are more efficient purchasing products through buying
companies. This notwithstanding, the Circular and Clarification Circular still
introduces a new administrative burden of complying with an additional (new)
pricing framework, different from those already being administered by the
Federal Inland Revenue Service and Nigeria Customs Service.
Related News
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Destination Payment for All Forms M, Letters of Credit and Other Forms of
Payment
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Dealers to Desist from Opening Forms M Whose Payment Are Routed Through a
Buying Agent
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