The Nigerian Federal Government is preparing to review and reduce the tax waivers granted to companies operating within the country, as these tax incentives have reached an annual total of N6 trillion. This action is in line with the previous administration’s plan for a comprehensive tax waiver review.
During a press briefing in Abuja where the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, unveiled the government’s eight-point agenda for transforming the economic environment, Mr. Taiwo Oyedele, Chairman of the Presidential Tax Reform Committee, disclosed this intention. Previous reports estimated the annual tax waiver figure to be around N5 trillion. Several companies, including Dangote Sinotrucks West Africa Limited, Lafarge Africa Plc, Honeywell Flour Mills Nigeria Plc, Jigawa Rice Limited, and Stallion Motors Limited, among others, have benefited from these tax waivers through pioneer status.
The proposed government action may affect these companies and others that have received various forms of tax waivers. It was previously reported that approximately 172 companies might not benefit from about N2.4 trillion in tax waivers under the Pioneer Status Incentive and other tax exemptions, as the government intends to phase out some of these waivers.
Taiwo Oyedele emphasized the need to periodically review the incentive regime, citing the country’s annual tax expenditure of around N6 trillion. He highlighted the importance of assessing whether the benefits of these incentives outweigh their costs and how they affect economic growth and competition among businesses in the same sector. Oyedele further stated that the government aims to eliminate disincentives in the tax system. He stressed that a focus on removing disincentives stimulates economic growth and creates wealth.
The government is also looking to close the N20 trillion tax gap through automated processes, which can boost government revenue when implemented. Oyedele mentioned that allowing individuals and businesses to prosper naturally generates revenue for the government.
Paraphrased Paragraph 7: The government’s agenda aims to create a business-friendly environment for investors, both domestic and foreign, by providing access to resources and facilities. The administration seeks to attract foreign direct investments and reduce reliance on borrowing.
Edun, the Coordinating Minister, emphasized that the government cannot continue relying on borrowing. Instead, it plans to attract foreign direct investments and create an environment conducive to business growth. The administration aims to leverage Nigeria’s natural resources and funds held abroad by Nigerians for economic development. The Minister also emphasized the importance of involving Nigerians in the diaspora in this effort to rejuvenate the economy.