Osinbajo says FG plans to inject 10 million gas cylinders in 12 states

William Ukpe

3 years ago

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 has revealed that the Federal Government will donate 10 million LPG cylinders in a year through certified marketers in 12 pilot states.

He disclosed this at the Liquefied Petroleum Gas (LPG) sensitisation under the theme: “Stimulating Delta state’s socio-economic growth through LPG adoption and expansion”, on Monday, in Asaba, Delta State, according to NAN.

The programme was organised by the National LPG Expansion Implementation Plan (NLEIP) under the Office of the Vice President.

What the Vice President said

He revealed that Nigeria had proven gas reserves of 260 trillion cubits feet (tcf) and unproven reserve of 600tcf, and that the country needs to maximize its use.

Osinbajo said, “Nigeria is gas rich as well as oil. Unfortunately, the concentration has been on oil, when we have 260tcf of proven gas reserves and 600tcf unproven gas reserves. All those figures will remain statistics unless we do something about it.

“A state like Delta is crucial because of the abundant gas available here. Gas flaring must come to an end and we must make use of resources that will come from ending gas-flaring.

“This programme is crucial because of the several advantages attached to usage of gas: the same cooking gas can be used to power vehicles. The power sector can also take advantage of the same LPG.

“Delta being one of the 12 pilot states, two from each geopolitical zone, where for the next one year, we will concentrate on making sure that both the state, industry and the people enjoy the advantages of this fuel.

“It was set up in 2017, and it was critical for us to look at the regulatory environment and also a way that distribution of gas is carried out in the country.

“Today, you buy your cylinder, I buy my cylinder, that is about to change that is why the 12 pilot states were chosen, so from consumer-cylinder-owned model, we are hoping to transit to marketers’ cylinder-owned model.”

He also added that the regulations for LPG cylinders states that five years after manufacture, the cylinder is supposed to recertified. 10 years after, reverify that cylinder, and 15 years after, that cylinder should be scrapped.

Osinbajo said that the FG has engaged two plants to manufacture cylinders and will inject five to 10 million cylinders within the 12 pilots states in the next one year.

“The marketer will be given these cylinders and they are responsible to ensure that the cylinders get to your homes”, the vice president said.

In case you missed it

Nairametrics reported earlier this year that the Federal Government disclosed that it is planning to launch Liquefied Petroleum Gas distribution channels in every local government in Nigeria.

The Minister of State for Petroleum, Timipre Sylva revealed that the ministry is targeting to ameliorate the energy challenge in Nigeria and clean cooking gas is key in this regard because 70% of greenhouse emissions are caused by deforestation.