A startling revelation was made at the weekend with the reported loss of N577billion (about $2.9 billion) Nigeria on tax waivers to mostly multi-national companies every year.
The amount is more than the federal government’s annual budget to the education and health sectors. These include corporate tax incentives such as reduction in Corporate Income Tax, CIT, rates and tax ‘holidays’ offered by federal government to investors for specified periods, to attract new Foreign Direct Investment, FDI, by companies operating in special economic zones.
For instance, the Federal Government granted the Nigeria LNG pioneer status, which freed the company from all tax obligations from its operations for 10 years.
However, Nigeria is not alone in this scam as some West African countries were equally indicted. Nigeria is followed by Ghana, which lost about $2.27billion annually, about thrice the allocation in her annual budget to the health sector.
In 2014, the Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, decried the incessant loss of revenue by the Federal Government through the existing waiver regime in the country. According to sources, between 2011 and 2013, import waivers granted various individuals and groups by the Ministry of Finance cost the Federal Government N1.4 trillion.
While then Minister of Finance, Dr. Ngozi Okonjo-Iweala, claimed that the government spent about N171billion on waivers as incentives to some critical sectors such as manufacturing, agriculture, power, and gas to boost the growth of the economy, the Nigerian Customs Service, NCS, said more than 65 percent of the “incentives” were reckless and questionable.
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