Nigeria - Pricing Nigeria - Pricing
Pricing is a key determinant of success in Nigeria and a major challenge for U.S. firms doing business in Nigeria due to two critical factors: low purchasing power of Nigerians and the availability of often more inexpensive alternate choices from Asian and North African suppliers.
Note that the Nigerian federal government charges a 5% VAT. Because of currency control measures implemented some years ago, distributors were forced to raise prices for imported commodities (especially food items like rice, spaghetti, and cooking oil) significantly (in some instances up to 30%) due to higher exchange rates at the parallel market. As a result of the increase in prices, there is a shift in patronage on most foreign goods from Algeria and Libya. Customs duties are levied on goods imported into Nigeria at varying rates ranging from 0% to 35% of the import value at the port of entry. Import adjustment taxes (also known as levies) are applicable as prescribed by annual fiscal policy measures. Online retailers operating in Nigeria are exempt from payment of corporate income tax during the first 5 years. This pioneer status represents the import duty waivers granted to companies as incentives to enable them make profit within their formative years. The incentives extend to tax credits, capital allowances, investment allowances, and tax exemptions.