Effective tax incentives ‘ll halt drain on govt revenue-Saraki

*Clears misconception on constituency projects

The Senate President, Dr Bukola Saraki on Monday, advocated for the need to properly manage tax incentives in Nigeria as a means of preventing drain on the revenue of government, which is often caused by misapplication.

He said an appropriate legal framework for the regulation of tax incentives is required to plug revenue leakage; and as a way of attracting and promoting foreign investments in the country.
Saraki made this known during a Public Hearing on three Bills by the Senate Committee of Finance on Tax Incentives Management and Transparency Bill, Companies Income Tax Act 2004 (amendment) 2017 and constituency projects (budgetary provision) bill, 2016)

He said the Bill on tax incentives became necessary in view of certain facts, which, according to him, were uncovered by the Senate Ad-hoc Committee on Duty Waivers, Concessions and Grants on the abuse in Nigeria.

Saraki described the Constituency Projects’ Budgetary Provision Bill as vital in a bid by the Senate to ensure that every local government is covered in the allocation of projects for the purpose of infrastructural development and wealth creation in the annual budget.”

He said, “The Tax Incentives Management and Transparency Bill will go a long way in entrenching transparency, accountability and sound economic management on a sustainable basis.

“It will aid efficiency and empower the relevant stakeholders with the right structures for a proper review of the financial and tax stream of any specific entity when necessary.

“The Companies Income Tax Act Amendment Bill (CITA) is a short amendment to the existing Act. The proposed amendments will encourage investments in the Industrial and mining sectors of the economy; especially in the rural areas where ordinarily it would have been unattractive to invest.

“It is expected that when the CITA Bill is passed into law, economic activities that would be generated through tax moratorium assured by this Bill, will pilot the much canvassed employment opportunities for our qualified youths; and open up communities where these companies are sited.

“The Constituency Projects Budgetary Provision Bill is an important developmental Bill. The Bill will ensure that every local government is covered in the allocation of projects for the purpose of infrastructural development and wealth creation in the annual budget”

Saraki said Nigerians had misunderstood the concept of constituency projects and had all along concluded erroneously that the projects are mainly for lawmakers. He said ultimately, National Assembly members have no direct control over the release of funds whereas, all payments are processed and effected in accordance with government regulations.

He said members of the National Assembly have only been identifying the needs of their constituents and recommend to the Executive during budgeting which of them to be executed.

“In some African Democracies with similar Presidential system as ours, like Kenya and Uganda; there exist legal and institutional frameworks for the implementation of constituency projects.

“This is to forestall controversies that might arise because of the poor understanding of the implementation process. I am hopeful this Bill will aid Constituency project implementation oversight and ensure its equitable distribution and execution.

“It is pertinent to educate the Public that this Bill is not to empower the National Assembly members to take 20% of the annual budget and use it for personal consumption.
However, the Federal Inland Revenue Service (FIRS) and the Institute of Chartered Accountants of Nigeria (ICAN) disagreed over Senate’s move to alter the Company Income Tax Act (CITA), which seeks to increase pioneer status to new companies in Nigeria from five to 10 years.

However, the FIRS Chairman Babatunde Fowler had endorsed the current provision in CITA, which gives five-year tax holidays to new industries

He submitted that five-year is ‘more than sufficient’ for investors to recoup their profit.

He said, “When one looks at the telecommunications companies that were given incentives, a lot of them actually did make profit before the pioneer status of the incentives even expired.

“So, I wouldn’t like us to grant such incentives for a period of 10 years. We believe that 10 years is a very long time for any business not to generate profit. And I believe investors would have taken due recognition of their investments and the time that they expect for profit to be made,” Fowler told the Senate Committee on Finance, which organised the public hearing.

The Institute of Chartered Accountants of Nigeria (ICAN), however differed, stating a 10 year incentives would encourage entrepreneurs and existing companies to expand their operations.

Olufemi Samuel, Abuja