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Finance Bill: SMEs, others in the agricultural sector may be granted pioneer status for 6 years

SMEs and other agricultural production businesses may be granted pioneer status for almost six years, according to the Finance Act.

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CAMA: What government hopes to achieve – PwC's Taiwo Oyedele explains, Finance Act: Take advantage of the many opportunities - CITN

Mr Taiwo Oyedele, West Africa Tax Leader and a member of PwC Global Board for Leadership Development, has revealed that SMEs and other small companies actively involved in primary agricultural production may be granted pioneer status for almost six years.

This disclosure was made in a tweet shared by the tax expert who played a major role as a member of the Inter-Ministerial Committee that drafted the 2020 Finance Bill.

READ: Finance Bill critical to the success of 2021 budget – Speaker Gbajabiamila

READ: FIRS to deploy new technology in tax collection, as MDAs refuse to pay 7.5% tax

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According to Mr Oyedele, small businesses and companies engaged in primary agricultural production in the pioneer industry such as crop, livestock, forestry and fisheries may be granted pioneer status for an initial period of 4 years and an additional 2 years – making a total of 6 years.

READ: FG to slash import duties on tractors, buses, others in 2020 Finance Bill

What you should know

  • The Pioneer Status Incentive (“PSI”) is one of the available tax incentives in Nigeria aimed at attracting investment into critical sectors of the Nigerian economy.
  • It was included in the key reforms of the new Finance Act 2020 to incentivize qualifying entities. According to the amendments made in the new Finance law which seeks redress in pioneer status, qualifying entities would be granted an income tax holiday of up to six years (four years initially and renewable for an additional two years) to entities that meet the criteria.
  • In addition, pioneer companies may enjoy other benefits including an exemption from withholding tax on dividends paid out of business profits.

READ: How to access new CBN’s Agric fund

Why this matters

The Pioneer Status Incentive is an impressive move as it will help to benefit corporate entities to cut down on overhead cost through tax exemption for the total period incentive.

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It will also double down on all companies operating in the crop, livestock, forestry and fisheries production space, as a pioneer industry to reduce the cost of doing business, in a bid to stimulate the development of the primary agricultural production subsector of the Nigerian Agricultural sector.

READ: FG grants tax incentives to Honeywell, 7 others, rejects applications from WAMCO, Flour Mills

This reform as captured in the 2020 Finance Act demonstrates the FG’s commitment to supporting business owners and other stakeholders in the Agricultural sector with a view to fostering increased participation.

About the 2020 Finance Act

  • The Finance Act 2020 which takes effect from 1st January 2021, introduces over 80 amendments to 14 different laws.
  • The finance bill 2020 seeks to support the implementation of the 2021 budget by proposing key reforms to specific taxation, customs, excise, fiscal and other laws including CITA, IDITRA, PITA, TETA, CETA, VATA, SOA, FIRSEA, FRA and PPA.

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Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor. He is a business owner and a stern advocate of Financial literacy, who believes in the huge economic prospect of the Nigerian Payment channels and Fintech space.

1 Comment

1 Comment

  1. Bello, R A.

    January 7, 2021 at 3:52 am

    If truely implimented, food costs will drastically reduce. Thanks for this information.

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Business

Non-oil sector is critical to Nigeria’s economic recovery in 2021 – Cordros Capital

The Non-oil sector is expected to drive Nigeria’s economic recovery in 2021.

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Japanese group trains farmers on modern technology 

Nigeria’s GDP growth and eventual recovery in 2021 is expected to be heralded and driven by the Non-oil sector of the economy.

This disclosure was made in the presentations at the e-press conference titled “Positioning in the new normal” by Cordros Capital.

According to the report…

  • In 2020, the Non-oil GDP dipped by 2.5% year-on-year which was attributed to the lingering impact of the pandemic on business activities, with partial easing of lockdown restrictions.
  • The Oil GDP also dipped by 13.9% year-on-year as a result of 18.1% year-on-year decline in crude oil production, as Nigeria fully complied with the OPEC+ agreements.
  • In 2021, the Non-oil sectors are expected to spearhead the economic recovery with the Services sectors growing by 2.69%. The Agriculture sector is expected to remain as resilient as it was in 2020 and grow by 1.89%, but the Manufacturing sector will dip by 0.89% as a result of weakening demand as well as limited FX supply constraints.

Why this matters

Nigeria’s economy has been quite monolithic since the 1980s and this has been persistently threatened by the instability in crude oil prices in the international market.

The need for the diversification of the Nigerian economy from over-dependence on oil cannot be overemphasized, especially going by the unstable and fluctuating global oil prices. This is aimed at minimizing the country’s vulnerability to macro-economic risks, such as production fall, fall in demand and price, and also a run out of reserves.

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In the early ’60s, agriculture was a booming sector – Groundnut, Cotton, Cocoa, Palm-kernel, etc, coupled with other mining activities were the major sources of the booming tradable goods before the advent of oil and its predominance in the Nigerian economy.

No doubt, the non-oil sector has what it takes to unlock the economy of Nigeria and position it on the path of resilient and sustained growth, if optimally harnessed.

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SON tasks workers to engage importers, others to foster a sanitized local industrial sector

The SON has called on its staff in the states to collaborate with importers and other relevant associations in their operations.

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Substandard Goods: SON to stop registration of products with similar names to popular products

The Standard Organization of Nigeria (SON) has called on its staff across the states of the federation, to collaborate with importers and other relevant associations, in a bid to achieve a sanitized market and healthy local industrial sector.

This call was made by Mr Farouk Salim, the organisation’s Director-General and Chief Executive Officer (CEO), during an official visit to the SON’s office in Awka on Thursday.

According to a report by NAN, Mr. Salim said in a bid to scale up the operations of the organization, and engender effective service delivery, there is a need for synergy that would not only reduce friction between SON and the business community, but also help achieve the target of a sanitized market and healthy local industrial sector.

He added that the states’ workers under the organization should reach out to various associations in their areas of interest and carry out sensitization on activities of the SON. He tasked all state coordinators to engage the business communities at all times, rather than relying on the routine engagement of security personnel in the course of employment.

According to him, the organization under his leadership was increasing the logistics and manpower support to state offices, by way of decentralising its operations to enable them function more independently and speedily.

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Salim stated that each state office will have Information Communication Technology (ICT), Human Resource and Legal departments, as well as the ability to hire low-level staff, to reduce their need to go to or wait for Abuja, over every operational issue.

In a bid to ensure people are accorded their rightful placements, the DG revealed that all staff promotion and conversion issues would be investigated and determined by a special committee for approval.

What they are saying

Mr. Salim, during the working visit and inspection, said:

  • SON was established essentially to protect the local industry from the unhealthy attack of foreign counterparts, through the importation of substandard and uncertified products. However, you can’t achieve this without engaging the associations in this space.
  • “You have guns and hammer but you do not need to use it all the times, you do not have to confront those you are working for, reach out to the associations and make them part of what you are doing. With this approach, they will be willing to hand over who you are looking for.”

Mr Olalekan Omoniyi, Coordinator of SON in Anambra attributed the success in Anambra to adherence to the vision of the DG, highlighting that some of the challenges in the state include the inability to enforce eProduct registration to marketers’ hostility towards staff members.

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He called for more operational vehicles, the establishment of SON office in the industrial town of Nnewi, training of staff and provision of online office equipment to boost efficiency in the state.

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Gulf of Guinea piracy hits record level in 2020 – IMB

Gulf of Guinea recorded an increase in piracy attacks in 2020, according to the Annual Piracy report of the IMB.

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West Africa’s Gulf of Guinea recorded an unprecedented increase in piracy attacks in 2020, according to the International Maritime Bureau in its 2020 Annual Piracy report published on Wednesday.

The IMB said its Piracy Reporting Centre (PRC) received 195 incidents of piracy and armed robbery against ships worldwide, in comparison to 162 in 2019. The incidents included three hijacked vessels, 11 vessels fired upon, 20 attempted attacks, and 161 vessels boarded.

READ: Medview increases fleet to compete with Air Peace but there’s a problem

The IMB reported that 135 crew members were kidnapped from their vessels in 2020, with the Gulf of Guinea accounting for over 95% kidnapped. A record of 130 crew members were kidnapped in 22 separate incidents.

  • “The rise is attributed to an increase of piracy and armed robbery reported within the Gulf of Guinea, as well as increased armed robbery activity in the Singapore Straits.”

READ: FG to launch policy to prevent smuggling of mineral resources

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According to the report…

  • Since 2019, the Gulf of Guinea has experienced an unprecedented rise in the number of multiple crew kidnappings. In the last quarter of 2019 alone, the Gulf of Guinea recorded 39 crew kidnapped in two separate incidents.
  • Incidents in the Gulf of Guinea are particularly dangerous as over 80% of attackers were armed with guns, according to the latest IMB figures. All three vessel hijackings and nine of the 11 vessels fired upon in 2020 related to this region. Crew kidnappings were reported in 25% of vessel attacks in the Gulf of Guinea – more than any other region in the world.
  • The furthest crew kidnapping in 2020 occurred almost 200 nautical miles (NM) from land with the average kidnapping incident taking place over 60NM from land.

READ: Nigeria is now the piracy capital of the world

READ: How MultiChoice is getting the economy working with BBNaija

The IMB said the piracy attacks demonstrates the increasing capabilities of pirates in the Gulf of Guinea and urged that vessels in the region to remain at least 250NM from the coast at all times, or until the vessel can transit to commence cargo operations at a berth or safe anchorage.

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READ: Ministry of Health approves COVID-19 protocols for aviation sector, as airports prepare to resume

The IMB also urged increased information exchange and coordination between vessels, reporting and response agencies in the Gulf of Guinea Region.

  • “Despite prompt action by navies in the region, there remains an urgent need to address this crime, which continues to have a direct impact on the safety and security of innocent seafarers,” said Michael Howlett, Director of the ICC International Maritime Bureau.

READ: Oil prices rally higher, as U.S oil producers suspend operations in Gulf of Mexico

What you should know

  • Nairametrics reported in 2019 that Nigeria outstripped Indonesia to become the worst country in the world for piracy. The rampant kidnapping activities in the Gulf of Guinea have increased tremendously in recent years, with Nigeria accounting for 48 out of the 70 recorded in 2019 – implying that Nigeria is responsible for almost one out of every four cases recorded globally.
  • In October 2020, the International Maritime Bureau (IMB) reported a rise in piracy and armed robbery on the world’s seas in the first nine months of 2020, with a 40% increase in the number of kidnappings reported in the Gulf of Guinea. Pirates armed with guns and knives are abducting bigger groups of seafarers at further distances off the West African coast.
  • The United States of America handed over maritime equipment to the Nigerian Navy to secure maritime threats in the Gulf of Guinea and also promote bilateral relations between both nations.
  • Confidence MacHarry, Analyst at SBM Intelligence told Nairametrics that for Nigeria to tackle its Fish production, Nigeria needs to work on a joint coalition to deal with the piracy problem in the Gulf of Guinea. He said: “To tackle the menace of piracy, the Deep Blue Project must be effectively launched. Not just rhetoric, launch it and let it be operational. Also, like the MNJTF, there should be an international coalition of the Gulf countries to tackle piracy collectively.”

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