The Nation Newspaper

Tag: Tax relief

  • Fed Govt approves tax relief to boost businesses, employment

    Fed Govt approves tax relief to boost businesses, employment

    • Massive road projects begin nationwide

    • Disaster relief fund set for take off

    The Federal Executive Council (FEC) yesterday approved a raft of far-reaching economic policies and infrastructure programmes.

    It endorsed a bill which seeks federal and state collaboration to suspend certain taxes on small businesses and vulnerable populations.

    Among the taxes to be axed are levies on road haulage, business premise registration, livestock, and market.

    The council okayed the Economic Stabilisation Bills, to be transmitted to the National Assembly for passage.

    The bills embody the recommendations of the Presidential Committee on Tax and Fiscal Policy Reforms set up last year by President Bola Ahmed Tinubu.

    The committee is headed by a tax expert Mr. Taiwo Oyedele.

    One of the bills seeks to amend the income tax laws, promote the export of goods and services, reform the exchange rate regime and unlock foreign exchange liquidity.

    Read Also: Tinubu to citizens: your sacrifices will soon yield lasting economic benefits

    It proposes tax relief to companies that generate incremental employment.

    Another bill offers personal income relief to people in private and public employment, from N200,000 to N400,000.

    FEC approved major road projects across the country, allocating billions of naira for construction.

    Minister of Works, Dave Umahi, said the Abuja/Kano Road project, handled by Julius Berger, received approval for N740 billion.

    The project, initially valued at N155 billion, was revised to N797 billion by the previous administration and further increased to N1.5 trillion.

    Other approved projects include the rehabilitation of Maraban-Kankara/Funtua Road in Katsina State, the construction of the Sokoto/Badagry Super-highway Section 2, Phase 2 in Kebbi State, and the dualisation of Afikpo-Uturu-Okigwe Road in Ebonyi, Abia, and Imo states.

    FEC approved N80 billion to complete the Bodo-Bonny Road in Rivers State, bringing the total cost to N280 billion.

    The Third Mainland Bridge, previously executed under emergency work, has been upgraded with solar lights and CCTV cameras, enhancing security and reducing road blockages.

    Umahi also mentioned 14 road projects and bridges affected by floods, including Ado-Ekiti/Afe Babalola in Ekiti State and Lafia/Shendam Road in Plateau State.

    FEC approved the establishment of a Disaster Relief Fund to enhance Nigeria’s preparedness and response to natural disasters.

    President Tinubu hinted at the plan for the fund during his visit to Maiduguri to sympathise with the state on the massive flooding.

    He said the plan was to work in collaboration with governors to draw some funds from the Federation Account and get additional funding from the private sector.

    To forestall a reoccurrence of the Borno flooding, FEC constituted a committee to review the integrity of dams nationwide, including the Alau Dam in Maiduguri.

    President Tinubu directed the Ministry of Agriculture and Food Security to deliver assorted foodstuffs to flood victims.

    Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the President directed the setting up of the fund to build greater resilience against disasters, which are increasingly frequent due to climate change.

    He said the fund would focus on financing disaster response efforts, leveraging contributions from federal, sub-national, and local levels, as well as the private sector and international organizations.

    Edun said: “We were in agreement with the decision of Mr. President to start the FEC with the devastating situation of flooding in Maiduguri in Borno State.

    “At the end of that discussion, Mr. President did direct that a Disaster Relief Fund be set up.

    “We need to build greater resilience in the form of a substantial Disaster Relief Fund, separate from the agencies that intervene in disasters. This will focus on the financing.”

    Minister of Water Resources and Sanitation, Prof. Joseph Utsev, said the FEC constituted a committee to review the integrity of dams nationwide.

    According to him, the committee is expected to develop detailed designs and recommendations for the overall reconstruction of the dam for future use.

    Minister of Agriculture and Food Security, Abubakar Kyari, said the President approved the immediate release of 100 trailers of rice, 50 trailers of maize, 30 trailers of sorghum, and 20 trailers of millet.

    He said half of the items have already been delivered, with the remainder still on the way.

    40 houses for justices, judges in Abuja

    FEC approved the construction of 40 houses for judges and justices in the Federal Capital Territory (FCT).

    Minister of the FCT, Nyesom Wike, said the aim was to provide secure and convenient accommodation for members of the judiciary.

    According to Wike, the 40 residences will be constructed in the Kantampe district, with 20 allocated to the FCT High Court, 10 to the Federal High Court, and 10 to the Court of Appeal.

    He said the project is slated for completion within 15 months.

    Wike said: “Due to the importance that the President attaches to the Judiciary, he finds it difficult to understand how judges and Justices will be living in rented houses and hotels.

    “It is not safe for our judicial officials and not convenient for them to do their work.

    “The President directed that the FCT through the FCDA should immediately construct 40 quarters at Kantampe district.

    “The FCT court will have 20, the Federal High Court will have 10 and the Court of Appeal will have 10.

    “This will be completed in 15 months.”

    Wike said the FEC approved several infrastructure developments to improve access to the judicial quarters.

    These include “construction of an access road from Artillery Road N11 from Mabuchi to the judges’ quarters; an access road from Ring Road 1-N16 Shehu Shagari Way to the judges’ quarters and development of roads connecting to the Court of Appeal Abuja division”.

    Schools get National Citizens Value Brigade

    To reverse the decline in traditional and national values, the FEC approved the establishment of the National Citizens Value Brigade in primary and secondary schools across the country.

    Minister of Information and National Orientation, Mohammed Idris, said the Council noted the gradual eroding of values especially, among the younger ones.

    “Council approved several changes in our policy to strengthen our national value system.

    “The National Citizen’s Value Brigade has been approved to be established in all our primary and secondary schools,” he said.

    The minister added that FEC approved the inclusion of a national value charter to be made mandatory in basic and post-basic school curricula.

    He said the FEC also approved the standardisation of national symbols.

    The Council approved the third stanza of the new national anthem as the national prayer to replace the existing one.

  • SMEs seek tax relief, ease of business climate

    Operators of small and medium-sized enterprises (SMEs) in Nigeria are seeking tax incentives to counter competition from regional rivals, offering lower rates.

    Speaking in Lagos, President, Association of Small Business Owners (ASBON), Dr Femi Egbesola, said SMEs are suffocating under multiple tax regimes observed across the various tiers of government.

    He said small and medium enterprises must be given enough tax incentives and improved access to financing to become significant contributors to economic growth, adding that despite the increasing contribution of SMEs to job creation, their full potential has yet to be harnessed.

    Although SMEs comprise 70 per cent of all businesses in Nigeria, employing 65 per cent of its workforce, they face a host of growth challenges including lack of technical capacity, difficulty in accessing markets and, most notably, lack of access to finance.

    According to him, the foremost problem is the lack of access to financing as bank requirements on collateral and business plants are strict.

    Unable to comply or sometimes lacking financial literacy, owners of small businesses are forced to rely on informal resources.

    He said it was important to open access to finance and opportunities in the various value chains, adding that SMEs must not only become a “vehicle for poverty reduction” but an engine of growth as well.

    Egbesola said small businesses have gained remarkable achievements.

    According to him, entrepreneurial influence is strong among Nigerians, who are overcoming financial, cultural and legal challenges to maintain local sustainable business models that can improve the economy and help decrease unemployment rates.

    Egbesola said the Federal Government was exploring entrepreneurial initiatives as means to facilitate job creation and inclusive economic growth.

    According to him, there are huge opportunities available for the manufacture of products.

    He said Nigeria has fabulous food production, food handling and food labelling companies, and that area of value addition is very much available, open and untapped here.

    However, he noted that the country is yet to witness the ecosystem necessary for entrepreneurship to thrive—that is, an integrated policy environment that encourages startups and enables entrepreneurial ventures to take hold and succeed. Instead, many challenges continue to impede entrepreneurs from reaching their full potential.

    Egbesola stressed the importance of policies that keep inflation low and stable. According to him, there is need to improve the basic structures of the economy in ways that will boost productivity. This should include reforms that improve infrastructure, enhance business environments, boost governance, and develop skills of workers.

    Egbesola said there were  obviously huge question marks in terms of providing the infrastructure needed to promote local manufacturing.

    According to him, his organisation is unique with the number of benefits that are open for entrepreneurs, especially with the first-hand expertise and mentorship they are gaining from leading business men and women in the various fields.

    He  said his association has empowered Nigerians to develop sustainable enterprises.

    According to him, ASBON is building farmers’ capacity to run commercial enterprises.

    He also announced that the association has instituted the annual Nigeria SME National Business Awards to encourage culture of entrepreneurship across the country. The event is scheduled for December 19 at Business Club, Ikeja Conference Centre, Alausa, Ikeja. Homegrown entrepreneurs and thought leaders with inspiring stories of disruption and transformation will be recognised at the Awards.

    According to him, Central Bank of Nigeria Governor, Mr. Godwin Emefiele, will deliver the key address entitled: “Analysis of Government Policies and Initiatives toward Entrepreneurship Development in Nigeria-Prospects, Opportunities, Challenges and Way Forward”.

    The event will offer a meeting point for entrepreneurs, businesses, educators and policymakers to discuss how to overcome new challenges in business.

  • Kwara gives tax relief to SMEs

    Kwara gives tax relief to SMEs

    The Kwara State government will give a five-year tax relief to small businesses to encourage owners and eradicate poverty.
    According to Governor Abdulfatah Ahmed, the tax relief is imperative to allow economic growth and development.
    The governor gave the order yesterday in Ilorin at a lecture to mark the 50th creation anniversary of the state. He maintained the state has not introduced fresh taxes but “only succeeded in blocking leakages in the system through effective management of the collection processes.”
    “Our business is not to kill your business, but to grow it,” he assured business owners.
    The governor, therefore, directed Chairman of the state Internal Revenue Service to coordinate the process of the tax holiday.
    Guest speaker and former Deputy Governor of the Central Bank of Nigeria (CBN), Mrs. Sarah Alade, advised the government to design an economic blue print which will strategically reposition the state for economic prosperity.
    In her paper, titled; “Socio-Economic Development of Kwara State: An Agenda for the future,” Dr. Alade said Kwara has the lowest unemployment rate in the country and should never be among the poorest. She, therefore, urged the government to step up its Public Private Partnership initiative.

  • Tax relief for pioneer companies

    Tax relief for pioneer companies

    The Federal Government has over the years put in place many different and overlapping incentive schemes to attract both local and foreign investment. Tax exemption is generally regarded as an industrial investment device; many developing countries like Nigeria offer it as one of their major incentives. Basically, tax incentives are designed to encourage investments in certain preferred sectors of the economy and sometimes geared towards attracting inflow of foreign exchange to complement domestic supplies for rapid economic development.

    Tax exemption otherwise known as tax holiday is one of the most widespread tax incentives. Tax exemption simply means a period of exemption from payment of taxes imposed by the government and this may be complete or partial. The granting of pioneer status, for instance, gives a company a preferred position in getting established, usually through exemption of income tax payment.

    A pioneer company is a company that engaged in manufacturing, processing, mining, servicing and agricultural industries whose products have been declared pioneer products on satisfying certain condition as determined by the Industrial Development Coordinating Committee (IDCC) of the Government under the Industrial Development (Income Tax Relief) Act Cap 179 LFN 1990. The pioneer tax holiday is for an initial period of three years or subject to further extension of two years or five years (once and for all without further extension).

     

    •Enabling Act

    Act Chapter 179 laws of the federation of Nigeria (LFN) 1990 but first enacted by Decree No22 of 1971 and commenced on 1/4/1970.

     

    Commencement Date: April 1, 1970

    •“An Act to repeal and re-enact, with major changes, the industries Development (Income Tax Relief) Act and to make provision for tax relief for certain industries that may be issued with pioneer certificates by the minister and other matters ancilatory there to”.

    Conditions:

    •Industry is not being carried out on a suitable scale as required and there are prospects for further development in the industry or its product.

    •If it is in the public interest to encourage the industry or its product.

    •Application may be made for the inclusion of a product on the pioneer list

     

    Mode of Application

    •All application to be addressed to the Minister.

    •State the status of the company.

    •Give details of qualifying capital expenditure to be incurred.

    •Give sources of qualifying capital expenditure and estimated cost.

    •Specify location of Assets.

    •Date of production of pioneer products.

    •Any by product not being a pioneer product.

     

    Terms of pioneer certificate

    •Must be in terms of the application to which it relates.

    •Specify permissible by-products to be produced.

    •Specify period within which company must be incorporated and conditions to be endorsed

    •Pioneer status will only be issued from a date when company was incorporated and shall be effective from a date not earlier than the date on which the application was submitted to the minister or date of incorporation, which ever is the later.

    •Any other condition will be specified by the minister

    •The minimum Tax relief period not exceeding five years to be stated 3(6)(a-b)

    Amending of Pioneer Certificate to Add New Product Section 4 (1) – (3) allowed a company during its pioneer period to make application in writing to the Minister to add a new product.

     

    Retrospective pioneer operation

    •Where a pioneer certificate is to be operative from a retrospective date, all acts shall be treated as not having been closed or not having happened and all taxes paid (if any shall be repaid as soon as may after the expiration of three months from the production day.

     

    Production date

    •No later than one month when the company is going into commercial production (marketable quantity), the company shall apply in writing for the certification of its production date.

    •Not later than one month after the production date or any extended period granted by the FIRS, the company shall make application in writing to the FIRS for the certification of the amount incurred as qualifying capital expenditure prior to the production date.

     

    Cancellation of pioneer certificate

    i) A Company may apply for cancellation

    ii) If a company contravened any provision of the Act or failed to meet conditions set.

    Tax Relief Period

    i) Commencing from the production date, it shall continue for three years (but can be extended):-

    ii) for another one period of two years (if the standard and rate of expansion are satisfactory), local raw material utilisation expansion, training and development of Nigerians, Government Policy Priority)

    iii) Five years (once and for all).

     

    Transition from pioneer status

    Conditions of Old Trade or Business of a Pioneer Company

    •The old trade shall be deemed to ceased permanently at the end of the tax relief period.

    •The pioneer company deemed to have set up a new trade on the day next following the end of its relief period.

    •All capital expenditures incurred and used by a pioneer company shall be deemed have been incurred on that day next following the end of its tax relief period.

    •Where it incurs a Net loss, that loss shall be deemed to have been incurred on the date on which its new trade commences i.e. it will be allowed to deduct all the losses brought forward from the pioneer period

    •The company must submit to the FIRS a list of its assets for certification.

    •At the end; the FIRS will issue a certificate of qualifying expenditure.

    •The Board is expected to issue the company for each year, the amount of income as ascertained and loss as arrived at (if applicable).

     

    Treatment of Capital Allowances and Losses

    • A capital expenditure incurred shall be deemed to have been incurred on that day next following the end of the pioneer period. I.e. regardless of the number of years granted a pioneer company, all capital expenditures incurred in line with the provision of the second schedule within the periods shall be deemed to have been incurred after the Tax relief period.

    • For losses incurred within the pioneer period, the cumulative amount will be deemed for computing total profits to have been incurred on the day, next following the pioneer period i.e. it will be allowed as a deduction in the new business.

     

    Documentation required by firs

    •Memorandum and Articles of Association

    •Certificate of Incorporation

    •Answer to standard questionnaire

    •Pioneer Certificate issued

    •The period approved

    •Production date

    •Products and by-products

    •For a going concern, the Audited accounts ended before the production date to be furnished (regardless of the number of months).

     

    Rendition of Returns

    •The conditions governing the submission of tax returns in CITA are applicable to a pioneer company.

    •One year from commencement of production date.

    •Period of one year successively.

    •Last year of the relief period.

    •Example: Kano Money Lender Ltd was granted a pioneer status commencing from July 1, 1999. The company has 31/12 as its accounting date. The period granted was for five years.

    •At the expiration of the pioneer period, it submitted accounts for the years ended December 31, 2004 and 2005 you are given these additional data

     

     

  • Tax relief for Total on renewable energy

    Tax relief for Total on renewable energy

    The Federal Government has granted Total Nigeria Plc tax relief for building a renewable energy plant.

    The initiative of the firm to introduce its new ‘Awango’ portable solar lamps into the market would go a long way in leveraging the country’s drive for climate change, the government said.

    Speaking at the launch of Total Sun King Solo Lamp, Awango and Total Sun King Pro Lamp, in Abuja, yesterday, the Minister of State for Power, Hajiya Zainab Kuchi, also promised that the Federal Government would give fiscal incentive to investors in renewable energy.

    She said the incentives form part of government’s support towards increasing the use of renewable energy.

    Hajiya Zainab Kuchi, urged the firm to build a renewable energy factory in Nigeria “because there are tax holidays, fiscal policy incentives and economic incentives. I assure you, that with a population of 160 million Nigerians, is a huge market. You need to harness it even if it is just for the social responsibility that you intend.”

    She said government will ensure that fiscal incentives are made available to investors in all aspects of renewable energy.

    “We have economic incentives for those who import equipment, and look forward to more enhanced participation in this area,” she addded