Finance

To ease tax burden on businesses, Tinubu signs four executive orders

To ease tax burden on businesses, Tinubu signs four executive orders

Suspends 5% telecom tax, finance act, customs tariff

·     Step aimed at alleviating hardship on Nigerians, says Alake

·     Adedeji: move meant to increase productive activities, not tax poverty

·     Telcos, NACCIMA, NECA, MAN hail president

·     Nigeria safe for foreign investors, says Akpabio 

Deji Elumoye, Sunday Aborisade in Abuja, Emma Okonji, Dike Onwuamaeze and Gilbert Ekugbe in Lagos

President Bola Tinubu has signed four Executive Orders deferring and suspending the commencement of certain taxes paid by individuals and companies in the country. Special Adviser to the President on Special Duties, Communications and Strategy, Mr. Dele Alake, made this known yesterday, while speaking with newsmen at the State House, Abuja.

The new policy ostensibly responds to concerns recently raised by THISDAY. In a recent publication on Tinubu’s first 30 days in office, THISDAY had highlighted multiple taxation as one of the challenges the president needed to address.

Alake said the latest step by the president was aimed at reducing tax burden on Nigerians and their businesses. It was also meant to address concerns raised by manufacturers and other stakeholders regarding recent tax changes, Alake said.

The new rules were, yesterday, commended by Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA); telecoms operators under the aegis of Association of Licensed Telecoms Operators of Nigeria (ALTON); Nigeria Employers Consultative Association (NECA); and Manufacturers Association of Nigeria (MAN).

Senate President, Godswill Akpabio, also yesterday, assured foreign investors of the safety of their investments in Nigeria. Akpabio restated the commitment of the President Bola Tinubu government to the provision of a conducive business environment for foreign investors in the country. 

Others with Alake at the media briefing were Special Adviser to the President on Revenue, Mr. Zacc Adedeji; a member of the Presidential Advisory Council on Finance and other Related Matters, Ms. Doris Aniettie; and Adenike Laoye from the Office of the Chief of Staff to the President.

According to the team, the latest changes became necessary as a response to the need for clarity and adequate notice for tax adjustments, as specified in the 2017 National Tax Policy.

Shedding more light on the new economic policies, Alake said the first Executive Order was the Finance Act (Effective Date Variation) Order, 2023, which deferred the commencement date of the changes contained in the Act from May 23, 2023 to September 1, 2023 to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.

The second order, Alake stated, was the Customs, Excise Tariff (Variation) Amendment Order, 2023, which shifted the commencement date of the tax changes from March 27, 2023 to August 1, 2023, also in line with the National Tax Policy.

Thirdly, Alake said the president gave an order suspending the five per cent Excise Tax on telecommunication services as well as Excise Duties escalation on locally manufactured products.

Fourthly, the presidential adviser disclosed that the president ordered the suspension of the newly introduced Green Tax by way of Excise Tax on Single Use Plastics, including plastic containers and bottles. He added that the president also ordered the suspension of Import Tax Adjustment levy on certain vehicles.

He said Tinubu’s intention was to listen to the concerns of the Nigerian people and alleviate the negative effects of the tax adjustments, rather than exacerbate the challenges faced by citizens.

Alake said, “The president wishes to reiterate his commitment to reviewing complaints about multiple taxation, local and anti-business inhibitions. The federal government sees business owners, local and foreign investors as critical engines in its focus on achieving higher GDP growth and appreciable reduction in unemployment rate through job creation.

“The government will, therefore, continue to give requisite stimulus by way of friendly policies to allow businesses to flourish in the country.

“President Bola Tinubu wishes to assure Nigerians by whose mandate he is in power that there will not be further tax raise without robust and wide consultations undertaken within the context of a coherent fiscal policy framework.”

According to him, some of the problems identified with the tax changes include the 2017 National Tax Policy approved by the former President Muhammadu Buhari administration prescribing a minimum of 90 days notice from government to tax-payers before any tax changes can take effect.

Alake stated, “This global practice is done with a view to giving taxpayers and businesses reasonable time to adjust to the new tax regime. However, both the Finance Act 2023 and the Customs, Excise Tariff Order 2023 did not give the required minimum notice period, thus putting businesses in violation of the new tax regime even before the changes were gazetted.

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“As a result of this, many of the affected businesses are already contending with the rising costs, falling margins and capacity underutilisation due to the various macroeconomic headwinds as well as the impact of the Naira redesign policy.”

Alake also noted that the Excise Tax increases on tobacco products and alcoholic beverages from 2022 to 2024, which had already been approved, were also being implemented.

The special adviser maintained that a further escalation of the approved rates by the current administration presented an image of policy inconsistency and created an atmosphere of uncertainty for businesses operating in Nigeria.

He said, “The Excise Tax of five per cent on telecommunication services has generated heated controversy. There is also a lack of clarity regarding the status of this tax, just as players in the sector also complain about the imposition of multiple taxes on their operations.

“We have also seen that the Green Taxes, including the Single Use Plastics tax and the Import Adjustment Levy on certain categories of vehicles require more consultation and a holistic approach to the country’s net zero plan in a manner that does not impact the economy negatively.

“In his inaugural speech, His Excellency, President Bola Ahmed Tinubu, promised to address business unfriendly fiscal policy measures and multiplicity of taxes.”

Alake explained that it was in fidelity to the pledge to put Nigerians at the centre of government policies that Tinubu signed the executive orders.

Answering question on whether the president’s action would affect the Petroleum Tax and if new taxes would be introduced, Adedeji said the intention of the president was to lighten tax burdens, harmonise and manage already existing taxes in the best interest of Nigerians.

The special adviser on revenue said, “As you rightly said that there’s plan or possibly proposal for Petroleum Tax, if you look at the current price templates, that has already been included, so this suspension has nothing to do with that. So the pricing structure that you have for PMS today, all those have been included, there are no new taxes that we’re bringing in.

“Like my colleague has said, one of the key focus of this administration is to harmonise our taxes, the way we collect it. Mr. President actually wants to simplify and make it friendly to business, the way we operate taxes in Nigeria.

“As we know, when we talk about the revenue management, it’s not only in tax collection, the starting point is our economic policy because our aim is not to tax poverty.

“Our aim is not to tax production. Our aim is to increase our productive activities, capacity to produce, then we can tax our consumption and that is the direction of our economic planning and then we want to increase the trust that we have in the government.

“If you have observed what has happened last month that we’ve been here, we’ve kept our words, part of what we are doing today, just to increase this trust that we’re here to do what’s best for the country.

“Lastly is that we have robust plan to improve our collection management, the compliance management, because that is what is needed. So we’re not going to impose new taxes, it’s the one that have that we’ll improve the collection, the management and the efficient use of those resources.

“That is the pledge and promise of Mr. President, which we’re here to make sure comes to reality.”

 Telcos, NACCIMA, NECA, MAN Hail President

NACCIMA lauded the Tinubu administration for some of the recent tax reforms.

The organised private sector (OPS) noted that the tax changes were intended to raise revenue while addressing important public health and environmental concerns.

In a statement yesterday, National President of NACCIMA, Dele Oye, stated, “We appreciate the administration’s commitment to ensuring that Nigerian businesses are not unduly burdened by unfavourable policies.”

Oye commended the decision by Tinubu to sign executive orders deferring the commencement of the tax changes as contained in the Finance Act and Customs, Excise Tariff (Variation) Amendment Order.

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He said, “We also support the suspension of the five per cent Excise Tax on telecommunication services, the Excise Duties escalation on locally manufactured products, the Green Tax on Single Use Plastics, including plastic containers and bottles, and the Import Tax Adjustment levy on certain vehicles.”

Oye urged the federal government to prioritise and increase continuous engagement with stakeholders and implement policies that were business-friendly and promoted sustainable economic growth.

The NACCIMA president stated, “We believe that the private sector is essential to achieving the government’s goal of higher Gross Domestic Product (GDP) growth and reduced unemployment rate through job creation. “We look forward to collaborating with the government to create an enabling business environment that will attract more investment into the country and enhance the competitiveness of Nigerian businesses.”

ALTON also commended Tinubu for the suspension of the five per cent excise duty on telecoms services.

Chairman of ALTON, Gbenga Adebayo, told THISDAY that the five per cent excise duty on telecoms services was one of the 39 taxes imposed on telecoms operations across networks, which operators and subscribers had been battling with.  

Adebayo said, “The suspension is a good development for telecoms subscribers and the telecoms industry. The Nigerian public should be grateful to the current government for being brave enough to suspend the five per cent excise duty on telecoms.

“As operators, we had been instructed to collect that tax from telecoms subscribers and remit it to the federal government, but with the suspension order, operators will no longer collect such tax and the subscribers will be free from the tax burden.”

The federal government, last year, introduced the five per cent telecoms tax and revisited it in April this year, after agitations from telecoms industry stakeholders, who initially rejected it because they considered it as multiple taxation that would negatively affect telecoms subscribers.

The federal government had said it would begin the implementation of the five per cent excise duty on all voice calls, SMS and data services, adding that the five per cent excise duty has been in the Finance Act 2020 but has never been implemented.

Similarly, NECA commended the federal government for announcing the four new executive orders and suspension of the five per cent excise tax and duties on telecommunication services, among others.

Speaking in Abuja yesterday, Director-General of NECA, Mr. Adewale-Smatt Oyerinde, commended the intervention by Tinubu through the new executive orders.

Oyerinde said, “We are, indeed, elated with the news of the executive orders, particularly with the suspension of the 5.0 per cent excise tax on telecommunication services; suspension of excise duties on Tobacco (30 per cent ad valorem rate with the introduction of specific rate of N4.2 per stick of cigarette for 2022; N4.7 per stick for 2003; and N5.2/stick in 2024); Beer (N40/litre in 2002; N45/litre in 2023 and N50/litre 2024); and Wine/Spirit  (20 per cent ad valorem rate with a specific rate of N50/litre in 2022) as proposed in the 2022 Fiscal Policy Statement.

“The suspension of 10 per cent green tax by way of excise tax on Single Use Plastics (SUPs), including plastics containers and bottles; Import Tax Adjustment (IAT) of 2.0 per cent on imported motor vehicles of 2000 cc to 3999 and 4.0 per cent on 4000 cc engines.”

The director general of NECA further said, “The new orders will, no doubt, support the efforts at improving the operating environment and mitigate the high cost of doing business in Nigeria, particularly, with the aftermath of the removal of fuel subsidy.”

Oyerinde stated that the issue of multiplicity of taxes had become a major challenge to organised businesses in the country. 

He stated, “Currently, businesses are made to pay over fifty different taxes and sundry charges, among which are Corporate Income tax, Import duties, Export duties, Excise duties, Rents, Capital Gains tax, Personal Income tax, Value Added Tax, Stamp Duties, Property tax, Licenses, Motor Parking fee, Motor Vehicle fee, Withholding tax, Land tax, Market License fee, Road tax, Business Premises, dividend tax, NHIS levy, Advert fee, Regulation fees, the new NYSC levy, as well as the regular user charges such as electricity, water, disposal fee, etc. 

“This huge tax burden, no doubt, has been a clog in the wheel of overall performance of organised businesses over the years. 

 “We had at numerous fora expressed concern on the escalation of taxes, including excise duties and its adverse implication on the business operating environment.”

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Oyerinde added that NECA had argued that beyond the definitive pronouncements by Tinubu, the president should also reconsider the VAT imposition on Automated Gas Oil (AGO), among other urgent interventions.

Oyerinde pointed out, “The reversal of the VAT will in no small measure ameliorate the escalating cost of energy and transportation cost currently being witnessed.

“As a follow-up action, we urge government to publish the list of approved harmonised taxes and levies by the Joint Tax Board (JTB) to address the issues of multiple taxes and levies and also design and implement measures that would draw informal sector businesses to the formal sector so as to widen the tax net for increased tax revenue.”

MAN also described the new executive orders as another commendable pronouncement by the Tinubu administration.

Director General of MAN, Mr. Segun Ajayi-Kadir, said Tinubu had again shown that it was important to take the views of stakeholders in the economy into consideration when policies that would affect them were being made.

Ajayi-Kadir said, “The unwarranted and clearly disingenuous escalation of excise and introduction of new taxes in the 2023 Fiscal Policy Measures needed to be discarded and President Tinubu has just done the right thing and we commend him.”

He added, “Existing manufacturers in the affected sector are pleased and we can now reconnect with our projections and plans made in the beginning of the year.

“We are expecting that the customs will stand down the requirements for compliance with the excise escalation and the registration for the green tax.

“So the clarity should be that those escalations have been suspended and would not be implemented. It is those that are not inimical to business and wrongly commenced, that are being programmed to commence at the September date

“We look forward to further engagements that will give fillip to the new policy measures he has enunciated, so that the challenges that would emerge would be effectively mitigated. For instance, one can see the possibility of inadequacy of foreign exchange and a lot of pragmatism is needed to ensure a massive inflow and strategic release.”

Nigeria Safe for Foreign Investors, Says Akpabio 

Akpabio, yesterday, assured foreign investors of the safety of their investments in Nigeria.

Akpabio, according to a statement by his media office, stated this while receiving the Jampur International Group, led by the Chief Executive Officer, Mohammed Shafiq.

The senate president told the visitors, “I welcome you on behalf of the Senate of the Federal Republic of Nigeria. Nigeria is very safe and ready for investors. 

“I am aware you are already investing in Nigeria in the area of mining, power and trading. Thank you for employing Nigerians in your companies.”

Akpabio noted that the decision of the federal government to put in place a single rate for foreign exchange was a deliberate attempt to further assure foreign investors of the safety of their investments anywhere in the country. 

He stated, “The current administration has been able to normalise our foreign exchange rate by having only one window. Investing in Nigeria is worth the while because of the returns on investments based on our population of over 200 million and the land mass.

“The president is ready to ensure that people get value for their investments, himself being a strong businessman. 

“He has a track record of achievements in Lagos State, when he was the governor. Lagos, today, has become one of the largest economies in Africa because of the foundation he laid.”

Akpabio assured his visitors of the safety of their investments through legislations.

He said, “I assure you that the federal government will do everything humanly possible to protect your investments by putting in place enabling laws on investments and security for its citizens and foreign investors. “

 Shafiq, in his remarks, said he was at the senate to formally congratulate the president of the senate on his emergence as Chairman of the National Assembly and to wish him well in office.

“We are here to congratulate you on your election as the president of the senate and to intimate you on our readiness to continue to partner with the government in the area of mining, agriculture and power,” he added.

Thisday

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