Following the original circular dated 24th August 2020 on destination payment, the Central Bank of Nigeria (CBN) has updated this directive on 18th November 2020 to clarify the term “Ultimate Supplier of Products”.
The apex bank of Nigeria (CBN) has released an updated directive via its most recent circular Ref no TED/FEM/FPC/ GEN/ 01/009, dated 18th November 2020,titled “Destination Payment for all Form M, Letters of Credit and other Forms of payment”.
The new directive seeks to clarify the various interpretations of the term “Ultimate Supplier of Products”. The clarifications include the following:
- That the provision of “Ultimate Supplier of products” means “the direct party selling the goods to the importer irrespective of whether the party involved is the manufacturer or internationally recognized buying company /supplier/agent”
- That the name of the “Ultimate Supplier of products” should be the same as the beneficiary on the form M, Invoice, Bill of Exchange, Letter of Credit instrument and any other relevant document to the transaction
- That Authorized Dealers should ensure payments are made only to the beneficiary whose name appears on the documents above
- That where it is unavoidable that an importer chooses to use a buying company other than the primary manufacturer, the importer shall provide the following documents (as applicable) for consideration and approval by CBN before opening the form M:
- Detailed KYC and profile of the buying company
- Three - year Audited and Financial Statement of the buying company
- Letter of reference from the Buying Company’s banker stating relationship and capacity
- Transfer pricing policy & arrangements in the home country
- Registration with its home country’s Chamber of Commerce
- Evidence of tax payments in the home country
- Evidence of authorization to act as agents and / or distributor to the original equipment manufacturer
The circular further directed that all authorized dealers are to ensure that the list of eligible third parties that meet the above requirements are submitted to the CBN for authentication before on -boarding.
Should you have any further questions regarding the update of this circular, please contact us so that we can guide you through the process.
Please note that Cotecna can also assist you in obtaining the SONCAP Certificate (SC), to process Pre-Arrival Assessment Report (PAAR) for clearance of goods from Nigeria port.