By Charles Abuede
The central bank in a circular titled: ‘Re: Destination Payment for all Forms M, Letters of Credit and Other Forms of Payment’ released on Thursday and signed by the director of the department of trade and exchange, O.S. Nnaji, stated that the provision is in furtherance to the earlier released circular on August 24, 2020, on the subject and following different interpretations of the term ‘Ultimate supplier of products’.
“The provision, therefore, means that the direct party selling the goods to the importer irrespective of whether the party involved is the manufacturer or internationally recognised buying company or agent/supplier shall be regarded as the ultimate supplier,” the circular stated.
However, where it is unavoidable that the importer chooses to use a purchasing company other than the primary manufacturer, the apex bank said:
“The importer shall make available detailed profile of the company, an audited financial statement of the buying company for 3 years, letter of reference from the purchasing firm’s banker that states the buyers’ capacity and relationship, transfer pricing policy and arrangements in the home country, registration with its local country’s Chamber of Commerce, evidence of tax payment in the home country and the evidence of authorisation to act as agents and or distributor to the original equipment manufacturer.”
The CBN further urged the authorised dealers to ensure that payments are made only to the beneficiary whose name appears on the transaction documents and also ensure that the list of eligible third parties who meet the requirements are to be submitted to the financial institution before onboarding.
- Name of beneficiary should be same as ultimate supplier of products
- Urges all authorised dealers to strictly comply
The central bank in a circular titled: ‘Re: Destination Payment for all Forms M, Letters of Credit and Other Forms of Payment’ released on Thursday and signed by the director of the department of trade and exchange, O.S. Nnaji, stated that the provision is in furtherance to the earlier released circular on August 24, 2020, on the subject and following different interpretations of the term ‘Ultimate supplier of products’.
“The provision, therefore, means that the direct party selling the goods to the importer irrespective of whether the party involved is the manufacturer or internationally recognised buying company or agent/supplier shall be regarded as the ultimate supplier,” the circular stated.
However, where it is unavoidable that the importer chooses to use a purchasing company other than the primary manufacturer, the apex bank said:
“The importer shall make available detailed profile of the company, an audited financial statement of the buying company for 3 years, letter of reference from the purchasing firm’s banker that states the buyers’ capacity and relationship, transfer pricing policy and arrangements in the home country, registration with its local country’s Chamber of Commerce, evidence of tax payment in the home country and the evidence of authorisation to act as agents and or distributor to the original equipment manufacturer.”
The CBN further urged the authorised dealers to ensure that payments are made only to the beneficiary whose name appears on the transaction documents and also ensure that the list of eligible third parties who meet the requirements are to be submitted to the financial institution before onboarding.