Nigeria loses N18trn to non-transparent tax waivers in 3yrs

THE Federal Government has revealed a loss of  N18 trillion to non-transparent tax waivers and pioneer status incentives (PSI) to companies in the last three years. 

The chairman of the presidential committee on tax and fiscal policy reforms, Taiwo Oyedele, disclosed this on Friday, November 24.

According to Oyedele, several incentives granted by the Federal Government to some companies were not impactful to the economy due to poor cost-benefit analysis.

“In one of the reports by the former finance minister, we got it from there, and as a matter of fact, we’re giving away N6 trillion annually. This is not good for the economy. People use their connections to the government to get such waivers.

“What we’re talking about is N6 trillion annually in the past three years. We’re looking at N18 trillion, not the exact number, but we’re looking at the average amount. It could be more than that,” Oyedele said in an interview monitored on Channels Television.

He stressed that Nigeria’s low revenue generation exposed the nation to more fiscal risks, as it has resorted to borrowing to fund its annual budgets.

“The revenue regenerated in 2021 by the Federal Inland Revenue Service (FIRS) and the year before is barely N6 trillion. We cannot be losing these kinds of funds to incentives that cannot be accounted for,” he said.

He noted that Nigeria would abide by international treaties committed to waivers but would henceforth evaluate its social and economic impact.

“The committee will look at the social and economic impact of subsequent waivers and incentives. We have suggested value-added tax (VAT) removal on diesel and compressed natural gas (CNG). The waivers we have checked have a social impact because of the current hardship in the country,” he added.

Established by the Industrial Development (Income Tax Relief) Act, No 22 of 1971, PSI is designed by the Federal government to reduce the cost of doing business in Nigeria by providing corporate income tax relief to qualifying companies, investing in industries designated as ‘pioneers’.






     

     

    In effect, PSI seeks to enhance beneficiary companies’ survival, profitability, and sustainability.

    “The PSI is a tax holiday which grants qualifying industries and products relief from payment of corporate income tax for an initial three years, extendable for one or two additional years,” the Federal Ministry of Industry, Trade, and Investment said.

    Although Oyedele did not mention the companies with such non-transparent waivers,  data from the Nigerian Investment Promotion Commission (NIPC) disclosed that the 11 companies that were granted the three-year PSI in 2019 were Royal Mills and Foods Ltd, Gowus Nigeria Ltd, Triton Aqua Africa Ltd, Globus Resources Ltd, Crown Flour Mills Ltd, Dharul Hijra Fertilizer Company Ltd, and Olam Hatcheries Ltd.

    Others are Harvestfield Industries Ltd, Royal Pacific Group Ltd, Dangote Sinotrucks West Africa, and Montego Upstream Services Ltd.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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