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OPS writes Buhari, demands tax holidays amid COVID-19 crisis

The Organised Private Sector has written to President Muhammadu Buhari, demanding for a tax holiday and other palliatives for the private sector.

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Ease of doing Business: NECA seeks more reforms , Unemployment to hit 33.5% in 2020, NECA warns, OPS writes Buhari, demands tax holidays for private sector amid COVID-19 crisis

The Organised Private Sector (OPS) has written to President Muhammadu Buhari, demanding for a tax holiday and other palliatives for the private sector to rescue the sector from the consequences of Coronavirus crisis.

In a letter dated March 24, 2020, and signed by the Director-General of Nigeria Employers’ Consultative Association (NECA), Dr Timothy Olawale, the group noted that the implications of the ongoing COVID-19 pandemic on the private sector could be severe enough to cause closure of companies and massive job losses.

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The group added that the government would also lose revenue through payment of taxes, and the resulting economic crisis could lead to an increase in social vices and insecurity unless the government intervened soon.

The letter read in part: “We commend the Federal Government and the Central Bank of Nigeria (CBN) for the on-going efforts at containing the Coronavirus. In particular, we note the various interventions and palliatives through the Central Bank of Nigeria (CBN) aimed at ensuring business continuity.” 

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[READ MORE: COVID-19: NSE extends time for submission of audited financial statements)

They noted that the closures and partial lockdowns around the country could heavily affect the sector, and asked the government to put more palliative measures in place for them.

“The specific support, would among others, include: A Temporary Scheme for paying Compensation to companies in the risk of laying off in order to retain jobs. This is to aid the continued existence of companies and prevent layoffs within private companies facing financial pressures as a result of Coronavirus.  

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“Under the scheme, which could last for the next three months, The government will cover 60% of the salaries of employees paid on a monthly basis, who would otherwise have been fired, with companies paying the remaining amount,” the letter read.

The group also asked for support from the government to negotiate and reschedule bank loans, especially loans taken in the last three months; as well as suspension of taxes and levies since business activities had been gravely affected by the crisis.

“The Real sector is facing the risk of total shut down, as there are no imports and exports, sales are down and production at almost zero levels. At the same time workers are expected to be paid and other commitments honoured by the businesses.”

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They also requested tax-free cash flow boost for employers – a stimulus package to help pay wages or for investment to protect against downturn inactivity, and tax payment deferrals for businesses with a turnover of less than N50 million, particularly in those sectors worst hit by the crisis such as Aviation, Hospitality, Manufacturing, Retails, Tourism, Food and Beverage, etc.

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They added that employees, who are self-isolating or those diagnosed with the virus, should receive payment support from the government, to encourage disclosure and help contain the spread.

What it means: Olawale explained that the palliative measures would help the private sector to continue to produce in order to meet the basic needs of Nigerians and thus prevent panic buying.

He urged the government to take cue from countries like Australia, China, Cook Island, Denmark, Ireland, France, Italy and Spain where palliative measures were given to the private sectors as well, to minimise the impact on the industry and guarantee job security for citizens.

Why this matters: The Australian government provided tax-free cashflow for employers, up to $25,000 to help pay wages or for investment to protect against downturn inactivity.

Chinese government exempted SMEs from payment of Pension contributions, unemployment and work injury insurances, and halved these payments for large companies from February to April 2020. Import goods and materials were also exempted from import tax.

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In France, the Government had proposed that water, gas and electricity bills, as well as rents, would be suspended for companies in a difficult situation. Fixed costs would also be reduced by the saving of rents, especially for businesses that have to close.

The Japanese government pays 8,330 yen per day for each worker who misses work, while self-employed people, as well as freelance workers, who meet certain conditions, will receive a uniform 4,100 yen per day.

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All of these measures have helped these countries, as well as other affected countries, to minimise the impact of the crisis on their private sector, which is known to be the mainstay of the economy.

Ruth Okwumbu has a MSc. and BSc. in Mass Communication from the University of Nigeria, Nsukka, and Delta state university respectively. Prior to her role as analyst at Nairametrics, she had a progressive six year writing career. As a Business Analyst with Narametrics, she focuses on profiles of top business executives, founders, startups and the drama surrounding their successes and challenges. You may contact her via [email protected]

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Tech News

MTN, Vodacom launched 5G in sub-Saharan Africa in 2020 – GSMA Report

Vodacom and MTN launched their first major 5G networks in Sub-Saharan Africa in 2020, according to the GSMA 2020 report.

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The Global System for Mobile Communications (GSMA) 2020 report revealed that Vodacom and MTN launched their first major 5G networks in Sub-Saharan Africa in 2020.

The telecoms operators offered 5G mobile and fixed wireless access (FWA) services in several locations across South Africa – this appears to be a welcome development, as the South African government had already assigned temporary spectrum in the 3.5 GHz range in the wake of the Covid-19 pandemic.

Obviously, the proximate opportunity to be harnessed for the 5G in South Africa is to use FWA to bridge the gap in fixed broadband connectivity for homes and businesses.

According to the report, there has been 5G trial runs in almost all the countries in Sub-Saharan Africa, including Gabon, Kenya, Nigeria and Uganda but the possibility of mass deployment of the 5G network is still not guaranteed, as there are significant levels of unused 4G capacity. Also, the 4G adoption rate is still relatively low, creating opportunities for the operators to increase their stakes in 4G.

As a boost to mop up the unused 4G capacity, the partnership between Safaricom and Google to finance the acquisition of 4G smartphones, provides the desired momentum as low-income consumers pay for 4G devices in convenient and flexible daily installments.

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According to the report, it is expected that over the next five years, the number of smartphone connections in Sub-Saharan Africa will almost double to reach 678 million by the end of 2025 — an adoption rate of 65%.

What you should know

  • It is expected that by 2025, there will be a little below 30 million mobile 5G connections in Sub-Saharan Africa, equivalent to almost 3% of total mobile connections.
  • The mobile market in the region will reach several important milestones over the next five years: half a billion mobile subscribers in 2021, 1 billion mobile connections in 2024, and 50% subscriber penetration by 2025.
  • The achievement of these critical milestones would be predicated on the operators’ commitment in providing reliable infrastructural networks across the region.
  • Between 2019 and 2025, the operators in the region would have expended/invested about the sum of $52billion in infrastructure rollouts.
  • The GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators with almost 400 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organizations in adjacent industry sectors.

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Financial Services

Stamp Duty on Nigerian Stock market transactions pegged at 0.08% from December 7

The NSE has given clarifications on the public notice released by the FIRS, itemizing contract notes at an ad valorem rate of 0.08%.

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NSE prepares to launch West Africa’s first Exchange-traded derivatives

The Nigerian Stock Exchange has given clarifications on the public notice released by the Federal Inland Revenue Service (FIRS) in July, itemizing contract notes at an ad valorem rate of 0.08% up from 0.075%, effective 7th December 2020.

The circular released by the Nigerian Stock Exchange reads:

“In reference to the Public Notice in the Business Day Newspaper of Monday, 20 July 2020, captioned ‘Clarification of Administration of Stamp Duties in Nigeria’ issued by the Federal Inland Revenue Service (FIRS) (A copy is attached as Appendix A for ease of reference).

The Public Notice provided, amongst other things, information on dutiable instruments and the applicable flat or ad valorem rates, with Contract Notes 1 itemized at an ad valorem rate of 0.08%. As you know, this is at variance with the current rate of 0.075% administered in the Nigerian Capital Market.”

To that extent, Dealing Members of the Nigerian Stock Exchange are to note the following:

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  • Effective December 7, 2020, the Central Securities Clearing System Plc. (CSCS) will adjust its system to implement the automated deduction of the Stamp Duty rate of 0.08%.
  • Dealing Members are required to immediately engage their software vendors for the required adjustments to their technology applications, to reflect the 0.08% rate ahead of the effective date of 7 December 2020.
  • Dealing Members are required to communicate the changes above to their clients immediately, ahead of the effective date.

What you should know

Nairametrics revealed that the FIRS listed at least 50 types of transactions that are eligible for stamp duty deductions.

Some of the listed chargeable transactions include bank deposit or transfer, loan agreement, Memorandum of Understanding (MoU), sales agreement, will, tenancy/lease agreement, and all receipts.

The FIRS noted that the recently inaugurated FIRS Adhesive Stamp is not the same as the postage stamp administered by NIPOST for the purposes of delivery of items and documents.

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The Stamp Duties Act, 19391 defines Contact Notes as “the note sent by a broker or agent to his principal, or by any person who, by way of business, deals, or holds himself out as dealing, as a principal in any stock or marketable securities, advising the principal, or the vendor or purchaser, as the case may be, of the sale or purchase of any stock or marketable security, but does not include a note sent by a broker or agent to his principal where the principal is himself acting as broker or agent for a principal.”

See the circular below:

Download (PDF, 566KB)

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Coronavirus

Covid-19: UK to approve Pfizer, BioTNech vaccine, to start immunization December 7

The UK government is set to approve the COVID-19 vaccine developed by BioNTech SE and Pfizer Inc next week.

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Covid-19: AstraZeneca vaccine gets huge boost, produces immune response in elderly, Vaccine, COVID-19: Russia to roll out vaccine in September ahead of the West 

The global reception of the Covid-19 vaccine developed by Pfizer Inc in collaboration with BioNTech following the positive outcome of its phase 3 trial, seems to have intensified as it is set for approval by the UK medical regulator.

According to Reuters, a report from Financial Times on Saturday suggests that deliveries would commence within hours of the authorization with the first immunizations using the BioNTech and Pfizer vaccine possibly taking place from December 7.

The UK Prime Minister, Boris Johnson, had earlier in the day, named Nadhim Zahawi, who is the current junior business minister, as the minister responsible for the deployment of COVID-19 vaccines.

The UK government has placed an order for 40 million doses of the Pfizer and BioNTech vaccine, which has been found to be 95% effective in the final analysis of the phase 3 trials in preventing the spread of a virus that has killed over 1.4 million people across the world with its devastating impact on the global economy.

The UK government had on November 20, formally asked its medical regulator, the Medicines and Healthcare Products Regulatory Agency (MHRA), to conduct a study of the Pfizer-BioNTech COVID-19 vaccine with a view to determining its suitability, the first step in making it available outside the United State

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The government which had secured 100 million doses of the Covid-19 vaccine developed by AstraZeneca and University of Oxford had also asked the regulator on Friday to assess the vaccine for a possible rollout before Christmas.

What you should know: The US drugmaker, Pfizer Inc, on November 18, 2020, announced that a final analysis of clinical-trial data of its experimental Covid-19 vaccine, which it is developing in collaboration with BioTNech, showed it was 95% effective, thereby paving the way for the company to apply for the first U.S. regulatory authorization for a coronavirus shot.

Pfizer said they had no serious safety concerns in a trial that involves almost 44,000 participants as their vaccine protected people of all ages and ethnicities.

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