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Business News

Review of tax incentives will save Nigeria huge revenue loses – OXFAM

The Nigerian government has been advised to review the country’s tax incentive policy which currently costs the country huge revenue loss.

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capital importation, Business, tax incentive, Nigeria

The Nigerian Government has been advised to review the country’s tax incentive policy, which currently costs the country huge revenue loss. This call was made on Wednesday by OXFAM, an International Non-Governmental Organization.

While speaking in Abuja at the public presentation of the Fair Tax Monitor Index Report, OXFAM’s country’s director, Mr. Constant Tchona, disclosed that the tax incentives Nigeria grants to stimulate investments in the country had been completely eroded by lack of transparency and poor governance, stating that there was no cost-benefit analysis to justify the exemptions.

Further details: Speaking further, Tchona stated that the process for granting tax incentives in line with fair taxation should involve mandatory parliamentary oversight, distinct requirements for incentives and review of expected results periodically.

“The National Assembly should enact a law that will criminalize the actions of banks, auditors, accountants and lawyers that facilitate illicit financial flows. When such professionals act contrary to existing regulations, they should be held accountable in Nigeria. This can be enforced through strengthened professional association bodies.

“There is also a need for the Nigerian government to fast-forward action on the new National Tax Policy and clamp down on corporate crimes.”

[READ: Lagos State Internal Revenue Service may start using BVN to collect taxes]

The amount lost: An earlier report released by the organization revealed that Nigeria lost about N580 billion annually to multinationals, owing to the inefficiency of Nigeria’s tax incentives. According to OXFAM, foreign investors do not make tax incentives a priority, but rather prioritize education, infrastructure, and an excellent workforce.

  • Speaking on Value-Added Taxes for small businesses, Tchona reiterated that the government is supposed to make gender-friendly tax laws which are more equitable to women as drivers of micro and small businesses in the nation.
  • The OXFAM director further stated that Value-Added Tax (VAT) should be made progressive through charging more for luxury goods than service items, stating that it would be helpful in reducing wealth inequality in the country.

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Bottom line: Basically, Nigeria has various tax incentives intended to encourage investment in key sectors of the economy. These include Tax holidays, Rural location incentives, Export incentives, Export Expansion Grant (EEG) Scheme, Gas utilisation incentives, Tourism incentives, Foreign tax credit and so on.

  • Related developments, including a report of the Federal Inland Revenue Service (FIRS) revealed that about 30% of firms operating in Nigeria were involved in tax evasion, while 25% of registered companies were not paying tax in Nigeria.
  • In this light, OXFAM believes that if a more progressive tax system is established as earlier stated, it will enable the government to deliver more essential services to boost the economy.

[READ FURTHER: Withholding Tax: Beginners’ Guide For Small Businesses in Nigeria]

 

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Business

FG explains why Lagos-Ibadan rail line was not linked to the sea

The government in its explanation said that the delay was due to disruption by trucks going in and out of the port complex.

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FG needs $656 million to complete Lagos-Ibadan railway project – Amaechi, Nigeria loses N150 billion annually to shipping tariffs, Ibadan to Kano rail construction

The Federal Government has stated why the China Civil Engineering Construction Company (CCECC) Nigeria Limited could not link the final part of the Lagos-Ibadan rail line to the sea.

The government in its explanation said that it was due to disruption by trucks going in and out of the port complex.

According to a press statement signed by the Director, Press and Public Relations of the Federal Ministry of Transportation, Eric Ojiekwe, this disclosure was made by the Minister of Transportation, Rotimi Amaechi, while on a routine tour of the Lagos-Ibadan rail line project on Saturday, April 10, 2021.

The Minister pointed out that the original blueprint for the Lagos-Ibadan rail line project was not adhered to by CCECC Nigeria Limited and TEAM consortium and therefore warned that the master plan of the soon to commence Ibadan-Kano rail line project should not be changed.

The statement from the ministry partly reads, “The Nigerian Government has restated its commitment to connect the whole country by rail with the soon to commence Ibadan-Kano Standard Gauge Rail project.”

Amaechi forewarned that the master plan of the soon to commence project should not be changed as the original blueprint for the Lagos-Ibadan wasn’t adhered to by Messrs CCECC Nigeria and TEAM consortium. The Minister who rode the train from Ebute-Meta to the 8.72 km Apapa Port Spur line, informed the media that the inability of Messrs CCECC Nigeria to link the final part of the rail line down to the sea is rather due to disruption by trucks going in and out of the port complex.’’

The Minister had noted that the Federal Government has paid its share of the counterpart funding of the Ibadan-Kano rail line project and is waiting for China-Exim bank to ratify its side of the agreement for the project to commence.

He also advised the Nigerian Railway Corporation (NRC) to acquire more land around the train stations and the rail tracks for future development adding that this will be near impossible to do in the future as whatever space available now would have been taken over by businesses attracted to the rail line.

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In case you missed it

It can be recalled that full commercial train services commenced on the Lagos-Ibadan rail line after train operations commenced on December 7, 2020, with only Lagos, Ibadan and Abeokuta residents enjoying the train services.

This is because other minor and major stations along that route were yet to be completed.

 

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Manufacturing

Industrial Index loses -12.39 points, as BUA and Lafarge Cement shares top losers list

The NSE Industrials index lost 12.39 index points in the first trading week in the month of April.

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Manufacturing: Activity levels pick up albeit readings still below water

The Nigerian Stock Exchange Industrial Index at the close of trading activities for the first week in the month of April closed on a bearish note, following a 0.66% decrease in the shares of BUA CEMENT and Lafarge.

At the close of trading activities on the Nigerian Stock Exchange on the 9th of April 2021, the industrial index depreciated by 55.01 index points, to close lower at 1,928.18 index points for the week.

When compared to the overall performance of the market, the NSE Industrial index underperformed, noting that the NSE All-Share Index and Market Capitalization depreciated by 0.66% to close the week at 38,866.39 and N20.3350 trillion respectively.

READ: COVID-19, VAT, FX scarcity adversely impacted our operations in 2020 – Nigerian Breweries boss says

What you should know

The NSE Industrial Index was designed to provide an investable benchmark to capture the performance of the Industrial Sector. It comprises the most capitalized and liquid companies in the industrial sector and is based on the market capitalization methodology.

The index tracks the performance of ten industrial companies on the Nigerian Stock Exchange which includes Dangote, BUA, and Lafarge Cement.

The overall performance of the companies for the week was bearish, as the index closed on a negative note driven by the decrease in the share price of BUA Cement and Lafarge.

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MEYER (19.51) was the only gainer for the week, while BUACEMENT (-1.09%) and LAFARGE WAPCO (-3.00%) were the only losers for the week.

GAINER

  • MEYER up by19.51% to close at N0.49.

LOSER

  • WAPCO down by -3.00% to close at N21.00.
  • BUACEMENT down by -1.09% to close at N72.70.

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