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Home Business News

FG to provide relief for daily wage earners as lockdown continues – Osinbajo

Ruth Okwumbu-Imafidon by Ruth Okwumbu-Imafidon
April 11, 2020
in Business News, Politics
FG foreign reserves Nigeria Yemi-Osinbajo, FG negotiates with Governors on bail-out fund, as NEC approves 100 billion for NLTP, bail-out fund States Governors, FG earns N28.6 trillion from VAT, others , Ease of doing Business: States must partner with Federal Government – Osinbajo , AfCFTA: Nigeria’s financial footprints to be extended across Africa – Osinbajo , FG seeks partnership with National Council of Registered Insurance Brokers, here’s why , Osinbajo says FG’s investment to take advantage of Africa’s $200bn tourism potential is massive, Pres. Buhari’s plan to tax US tech companies might provoke US trade war https://www.yemiosinbajo.ng/vps-lecture-at-the-national-defence-college-course-28-lecture-event/ https://punchng.com/digital-firms-to-pay-tax-under-new-finance-act-osinbajo-2/ https://www.nytimes.com/2020/01/31/business/economy/digital-tax-oecd.html Nigeria at risk of trade war with United States as the Nigerian Government says it will impose taxes on technology companies like Facebook, Google, and other digital companies that have been escaping tax payment in Nigeria due to their lack of presence within the country. The US has threatened tariffs on imports from countries that impose such digital taxes. The tech companies with heavy revenue footprint in Nigeria now have their backs against the wall because President Muhammadu Buhari-led administration want to tax them to grow Nigeria’s revenue; which has led to the development of the Finance Act. The Finance Act is the solution of President Buhari to the revenue problem which the Finance Minister, Ahmad Zainab, said Nigeria has. The Nigerian government is looking to grow its revenue through taxes, and one of such is the digital tax which Vice President, Yemi Osinbajo, said will commence despite the threat of the US which is aimed at protecting the silicon companies. No more back door operation: Facebook, Google, Amazon, YouTube and many more digital businesses have a sizeable market in Nigeria, but don’t have a physical structure for their operations; this has cost Nigeria tax revenue. These companies are known to prefer situating their companies in tax havens where taxes are low compared to other African and European countries. Ireland and Bermuda are some of the tax havens for these multinational companies. But according to Osinbajo, the period of making gains from their operation in Nigeria without paying tax is over. Osinbajo, while speaking at The National Defence College, Course 28 Lecture Event, said that, “Let me also briefly mention the new provisions on Taxation of Digital Economy and Non-Resident Companies. This is a very important aspect of our taxation policy. Before the Finance Act, only companies that had a physical presence or a fixed base in Nigeria could be taxed. “So, most digital companies, I mean any of the big technology companies, or multi-national digital companies, that did not have physical offices in Nigeria, made significant income from Nigeria from online activities, such as advertising, movie streaming, online gaming and e-commerce from subscribers in Nigeria, but paid no taxes whatsoever because they did not have a physical base in Nigeria. So now we are no longer relying on the fixed base or physical address criterion.” He added that, “Under the Finance Act, once you have a Significant Economic Presence (SEP) in Nigeria, you are liable to tax. Whether you are a resident here or you are not resident as a company, as long as your economic presence is significant, you are liable to tax. If you are streaming online, advertising using Google adverts, whether you are resident here or not, you are now subject to tax. “So, non-residents who previously had no fixed base and no Nigerian tax liability will now be liable to tax based on the SEP criterion. The Minister of Finance is empowered to issue a regulation defining what Significant Economic Presence means. So, she just defines the scope of what we will be looking out for in terms of Significant Economic Presence.” Osinbajo explained. Nigeria is not alone in this crusade: Nigeria is not the only country trying to tax these technology companies. The European Union have also been coming after them for taxes. The EU is also stating that if the technology companies are making economic gains through their operation despite the lack of physical presence in several European countries, then the tech conglomerates should be taxed. This has led to review of tax laws by the EU. According to a report by New York Times, new rules to tax these multinational companies are being discussed by about 130 countries through the Organization for Economic Cooperation and Development. The review has become necessary as digital economy begins to open new revenue sources. Should Nigeria tread carefully? The United States has threated to hit any country imposing taxes on the technology companies - which are mostly American – with tariffs on import. This put Nigeria at a rather impossible position, as the country is not economically strong enough to enter a trade war or go on a tit for tat battle with the US. According to Q3 report, the US is the fifth biggest export destination for Nigeria, having imported N322.2 billion (6.28%) goods from Nigeria, with crude oil constituting N329.8 billion. Although, the US is behind Ghana, India, Netherlands and Spain, it doesn’t change the significance of the US market to the Nigerian economy. Meanwhile, Nigeria’s top import sources include the U.S, accounting for N747 billion in H1 2019. Franch had moved to tax the online businesses but have now delayed the plan this year after a meeting with the US; the US has also paused its tariff threat against France. Britain is also one of the digital tax drivers. With such threat hanging over the digital tax, it’s unlikely Nigeria will go ahead taxing these technology companies, as US feels such tax is discriminatory against US firms, and have suggested these companies be allowed to decide if they want to operate with the new tax standards., FG will provide succor for daily wage earners as lockdown continues – Osinbajo

Vice President, Yemi-Osinbajo

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The Federal Government of Nigeria has expressed concern over the plight of daily wage workers due to the lockdown, and is making plans to provide succour to them.

This was disclosed earlier today by Vice President Yemi Osinbajo, who also serves as the Head of the Economic Sustainability Committee that was recently set up by the Presidency. He tweeted this:

“Many of our citizens are daily wage workers and the President has expressed concerns about this. We are now thinking of ways to provide succour for the period they are unable to work.”

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Many of our citizens are daily wage workers and the President has expressed concerns about this. We are now thinking of ways to provide succour for the period they are unable to work. pic.twitter.com/TEJeCCM728

— Prof. Yemi Osinbajo (@ProfOsinbajo) April 11, 2020

The VP added that the Economic Sustainability Committee is also going a step ahead to think of how the economy would be stabilised after the pandemic, to alleviate long-term consequences.

“There are many concerns associated with the lockdown. We are concerned about how the economy will remain stable, how jobs can be protected and ways to create new jobs where possible.

“We believe that together, Nigeria will prevail!”

There are many concerns associated with the lockdown. We are concerned about how the economy will remain stable, how jobs can be protected and ways to create new jobs where possible.

We believe that together, Nigeria will prevail!

— Prof. Yemi Osinbajo (@ProfOsinbajo) April 11, 2020

(READ MORE: FG’s conditional cash transfer programme gets more beneficiaries despite criticism)

He further noted that the Economic Sustainability Committee would soon submit its comprehensive report to President Muhammadu Buhari. The report will detail the thoughts and ideas of members on the best way forward for Nigeria.

The president had set up the committee on March 29, after declaring a 14-day lockdown in the FCT, Lagos and Ogun States. Members of the committee were charged to come up with short and long term palliative measures for Nigerians and the Nigerian economy.

As you may well know, there have been calls from several quarters asking the government to provide financial support to low income earners in the country. These calls have specifically been directed at the Minister for Humanitarian Affairs, Disaster Management, and Social Development to widen the list of vulnerable people.

As popular social/political commentator, Dr Joe Abah has noted, many artisans in big cities like Lagos have greatly been affected by the Coronavirus pandemic and subsequent lockdown measure that was taken by the Presidency.

During this lockdown, my heart goes out to those artisans that work for daily pay. I can’t imagine what electricians, plumbers, hairdressers, barbers, mechanics and bricklayers are currently going through now, not being able to make a living. May the good Lord strengthen you all.

— Dr Joe Abah, OON (@DrJoeAbah) April 10, 2020

 


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Tags: Coronavirus pandemicCOVID-19 lockdownCOVID-19 relief effortsEconomic Sustainability CommitteeFederal Government of NigeriaNigerian Business NewsProfessor Yemi Osinbajo
Ruth Okwumbu-Imafidon

Ruth Okwumbu-Imafidon

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 ruth.okwumbu@nairametrics.ng

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Comments 2

  1. Dike Eze Stanley says:
    April 11, 2020 at 3:45 pm

    Mr President God will bless you for your good work in Nigeria, please Mr President the poor Nigerians are still coming out everyday by day because there is no money in the house to eat food and our polartion is going up everyday by day on Corona virus. Mr President, please I’m a poor Boy no mother no father my account no is 0027586191 Access Bank my Name Dike Eze Stanley. God will bless you abundantly Mr President thanks.

    Reply
  2. Zest says:
    April 12, 2020 at 1:55 pm

    God know the concrete ways to make you and your Grandson to suffer for the suffering masses are going through. Your daily claims is an invalid to provide relief material or funds for the masses. Lockdown still on and Nigerian has been dying of hunger because no single case of covid-19 in Nigeria!

    Reply

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