Monday, 01 April 2024 04:50

Despite FG’s promise to streamline tax waivers, beneficiaries increase across industries - Report

Rate this item
(0 votes)

 

About 107 companies including Dangote and Mikano International are currently enjoying tax exemption from the Federal Government despite its insistence on discontinuing the programme and drastic steps to improve its revenue base.

It also increased the number of beneficiaries enjoying Pioneer Status under the Industrial Development Income Tax Act by 24 from 83 in the first quarter of 2023 to 107 firms by the fourth quarter of 2023.

This was disclosed in the latest Pioneer Status Incentive reports released by the Nigerian Investment Promotion Commission and obtained by our correspondent on Sunday.

An analysis of the PSI report showed that while the requests of 79 firms were newly received, 211 firms are pending; 56 companies had their applications approved in principle, while 19 firms were granted incentive extensions for another three years to 2026.

“Approvals-in-principle are subject to the payment of application fees and only take effect after the payment of such fees,” the report stated.

The pioneer status is an incentive offered by the Federal Government, which exempts companies from paying income tax for a certain period. This tax exemption can be full or partial.

Offered under the Industrial Development Income Tax Act with tax reliefs for a three-year period, the incentive is generally regarded as an industrial measure aimed at stimulating investments in the economy.

The products or companies eligible for this pioneer status are those that do not already exist in the country.

Although the report didn’t contain the amount granted to the companies, Data from the Federal Inland Revenue Service annual reports indicated that about 71 companies enjoyed N390.26bn pioneer status incentives between 2021 and 2022.

The reports also revealed that investments made by the 107 companies during the year amounted to N2.49tn. They operate in sectors that include manufacturing, solid material, pharmaceuticals, information and communication, trade, construction, waste management, electricity and gas supply, tourism, and infrastructure, among others.

The companies that have benefitted include Dangote Fertilizers, Mikano International Limited, Sinotrucks West Africa Limited, West African Cubes Limited, Jigawa Rice Limited, JMG Nigeria Limited, Rain Oil Limited, Okpella Cement Plc, Greenville Liquified Natural Gas Company Limited.

More included GZ Transport and Logistics Nigeria Limited, African Foundries Limited, Royal Pacific Group Limited, Kunoch Hotels Limited, Princess Medi Clinics Nigeria Limited, Medlog Logistics Limited, and Masters Liquefied Gas Company Limited.

Others included Aarti Rolling Mills Limited, Von Automobile Nigeria Limited, Ikorodu Steel Mills Limited, Confluence Metals Fabrication Company Limited, Cormart Nigeria Limited, Tiamin Rice Limited, Outsource Global Technologies Limited, Crown Flour Mills Limited, Elvis Hotels Nigeria Limited, Olam Hatcheries Limited, among others.

It also noted that the government declined the applications submitted by five investing firms including Checkers Africa Limited, Sygen Pharmaceutical Limited during the review period.

Tax incentives have been a contentious issue due to the high amount of revenue lost to waivers granted every year. The Federal Government recently disclosed plans to review and reduce tax waivers given to companies operating in Nigeria.

It said companies operating in Nigeria received tax incentives worth N6tn annually.

But officials of the commission had maintained that the incentives were meant to boost foreign investments into the country.

Chairman of the Presidential Tax Reform Committee, Taiwo Oyedele, recently said the committee would carry out a comprehensive tax waiver review in line with the plan the previous administration had set.

At a press briefing last year, the Head of Incentives Administration, Lovina Kayode, indicated that not all companies were granted tax breaks due to stringent procedures followed by the commission on waivers award.

She said, “The pioneer status incentive is a stimulus that allows a company to get three years of not paying corporate income tax, just to get more investments.

 “This process is stringent because our parent ministry and the federal inland revenue service are involved to make sure the right investors get this incentive.

“So far this year, we granted 34 applications have been approved and one of the things we intend to do is to ensure we are not just giving incentives to underserving companies. However, there is already a notion that Nigeria gives out too many waivers, incentives, and concessions.

“However, tax expenditure which means what government has lost by granting pioneers status incentive is just a small amount compared to what the country gains by granting these incentives to qualified companies.”

She further revealed plans by the commission to publish impact reports on the effectiveness of the pioneer status report on job creation and other economic activities to promote investments.

“On impact, that is one thing NIPC is planning on, next year, it is one of our biggest tasks to do an impact assessment. These incentives we gave out, how have they impacted the country in terms of job creation?

“How many jobs are the companies creating and what kind of import substitution has come about because we have granted these incentives and how much would the government gain after the three years of them not paying these taxes,” she added.

Speaking in an earlier interview, economic experts stressed the role of tax waivers in driving economic growth but questioned the transparency and objective rate of the Federal Government in granting tax waivers.

Chief Executive Officer, Centre for the Promotion of Private Enterprise, Muda Yusuf, also noted that there was nothing wrong with waivers if they were in line with tax policies.

He noted that tax incentives were necessary to encourage investment and the establishment of some pioneer businesses.

He said, “The whole idea of incentives is to grow the economy. When you are growing the economy, you are not only looking at revenue, you are looking at employment and multiplier effects. In the medium to long term, you will get this revenue by the time you are able to grow these investments. It is inappropriate to see it as revenue loss unless the incentive policy itself is discriminatory.”

He stressed that the process should be transparent and seen as an effort by the government to grow the economy.

 

Punch

May 24, 2024

Younger workers are rejecting assignments. Here's why

If you want to attract – and retain – younger workers, pay attention to their…
May 22, 2024

Northern leaders slam Tinubu, say govt policies responsible of increasing misery, unemployment in Nigeria

The Arewa Consultative Forum (ACF) has criticized policies implemented by President Bola Tinubu's administration, attributing…
May 26, 2024

How to talk to people: 3 ways to stop the cycle of negative self-talk

Negative self-talk, or the experience of your inner monologue being hyper-critical, can erode your confidence.…
May 25, 2024

Wanted criminal pretends to be deaf and dumb for 20 years to avoid prison

A Chinese man wanted for murder managed to avoid police detection for over 20 years…
May 22, 2024

Gunmen kill 40 in fresh attacks on Plateau communities

At least 40 people were killed and many others wounded in an attack by gunmen…
May 26, 2024

What to know after Day 822 of Russia-Ukraine war

RUSSIAN PERSPECTIVE We must stay a step ahead of the enemy – Putin Russia “must…
May 19, 2024

Scientists develop device that can detect when someone is sarcastic

Experts have developed a device that can detect when someone is sarcastic It works by…
April 30, 2024

Finidi George is new Head Coach for Super Eagles

Former Nigerian winger Finidi George has been appointed as the head coach of the national…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Prof Wale Are Olaitan: Editorial Consultant; Femi Kawonise: Head, Production & Administration; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2024 NewsScroll. All rights reserved.