A proposed new tax law seeks to provide value-added tax (VAT) exemptions on oil and gas exports, crude petroleum oil and feed gas for all processed gas, as well as goods purchased for use in humanitarian donor-funded projects.
The Nigeria Tax Bill, 2024, on infant products, locally manufactured sanitary towels, pads or tampons, military hardware, weapons, ammunition and other goods supplied to the armed forces, para-military and other security agencies of the Nigerian Government. Also tries to exempt manufactured uniforms. Payment of VAT.
However, in what may be a setback for the proposed law, governors of 19 states under the aegis of the Northern States Governors Forum (NSGF) on Monday rejected the proposed tax amendment bill.
In a communiqué issued at the end of a joint meeting with the Northern Traditional Rulers Council at Government House, Kaduna on Monday, the governors urged the National Assembly to “oppose any bill that may jeopardize the well-being of our people “.
Gombe State Governor/NSGF Chairman, Mohammadu Yahaya, who read the group's communique, called for equity and fairness in the implementation of all national policies and programs to ensure that no geopolitical zone remains under-transformed or Don't stay on the margins.
Shared passenger road-transport services were similarly considered for exemption from VAT; and the purchase, rental, hire or lease of tractors, plows and other equipment used for agricultural purposes, provided that the person engaged in agricultural business must first pay VAT and request a refund from the tax authority.
were supplies consumed by an approved entity in other export processing or free trade zones, provided that the supplies were consumed on its approved activity; and goods or services supplied to a diplomatic mission, diplomat or person accredited under the Diplomatic Immunities and Privileges Act whose activity is in the public interest and not for profit.
Furthermore, plays and performances organized by educational institutions as part of learning; Land or buildings, including interest in land or buildings; and money or securities, including interest in money or securities, were exempt from VAT obligations.
Further, the proposed law specifies VAT to be levied at the rate of zero per cent on taxable supplies.
These included basic food items; All medical and pharmaceutical products including medicinal herbal products; Educational books and materials; Fertilizer; locally produced agrochemicals; locally produced veterinary medicine; locally produced animal feed; and agricultural seeds and seedlings.
generated by other power generation companies (GENCOs) and supplied to the National Grid or Nigeria Bulk Electricity Trading Company (NBET); Electricity transmitted by the Transmission Company of Nigeria (TCN) to electricity distribution companies (DISCOs); medical services; and tuition related to nursery, primary, secondary or tertiary education.
It also included exported goods except oil and gas; exported services; exported illiquid assets; and medical devices.
Furthermore, under the exemption by Presidential Order, the Bill states that where a Government or an agency of the Government in Nigeria has entered into an agreement with the Government of another country or a donor agency for the provision of development financing for a project Had compromised. In Nigeria, and such agreement provides for the exemption from VAT of supplies made under the project, the President may, by an order published in the Official Gazette, give effect to the exemption.
This section includes basic food grains, cereals, including maize, rice, wheat, millet, barley, sorghum, oats, fonio and finger millet, in the form of grain, flour, crop, whether raw or semi-processed, Whether in wholesale or retail, among many other items.
To address the issue of double taxation, the Bill clearly provides, “Where the Government of the Federal Republic of Nigeria applies to a treaty partner for the purpose of providing relief from double taxation in respect of tax imposed under this Act, The agreement shall have effect upon ratification or domestication by the National Assembly.
It provides that relief from double taxation shall be in respect of income tax paid under the laws of the treaty partner against the income tax imposed under this Act.
The bill states, “Where an agreement has come into force, no obligation in the Nigeria Tax Administration Act or any other law in Nigeria with respect to confidentiality of any information required to be disclosed to an authorized officer under the agreement shall apply. Will not prevent disclosure. Treaty partner.”
It also provides, “The Minister may make rules to carry into effect the provisions of any agreement under this section. For the purposes of providing relief from double taxation in Nigeria, all existing double taxation agreements are deemed to have been made under the provisions of this section and shall be in force throughout Nigeria with effect from 1 January of the year immediately following the date of entry into force of the agreement. Force.
“The agreement referred to in sub-section (1) of this section shall be for the purpose of eliminating double taxation without creating opportunities for non-taxation or under-taxation through tax evasion, avoidance or other forms of abuse, including treaty-shopping arrangements. Including obtaining relief provided for in the Agreement for the indirect benefit of residents of another country or territory that is not part of the Agreement.
“For the purposes of the agreement referred to in sub-section (1) of this section, a non-resident may be a beneficiary under the agreement where that person is a resident of the relevant Treaty Partner and is the beneficial owner of the income in respect of which the benefit is being claimed. Is.”
The proposed legislation states, “Nothing in this section shall be construed to allow relief in respect of additional tax paid for the relevant tax year under this Act or the domestic law of the treaty partner in accordance with the global minimum tax rules Will go.” Relates to a permanent establishment situated in the Treaty Partner.”
The Nigeria Tax Bill, 2024 further expands on the presumptive taxation regime, allowing the Minister to determine the taxes payable in certain circumstances.
It says, “Notwithstanding any provision of Chapter Two of this Act, where, for all practical purposes, the income of a person taxable under this Act cannot be ascertained or records are not so maintained So that proper assessment of income can be made. , such person shall be assessed on such terms and conditions as may be prescribed by the Minister in a regulation under the presumptive tax system.
“The chargeable income of a person is the total income of that person, excluding eligible deductions, determined under the provisions of section 28 of this Act. For the purposes of this section… 'eligible deductions' include payments made by the individual in a year of assessment – individual's contributions under the National Housing, individual's contributions under the National Health Insurance Scheme, individual's contributions under the Pension Reforms Contribution of. Act, interest on loan for developing owner-occupied residential house.
“…the annual amount of any annuity or premium paid by a person during the year preceding the year of assessment in respect of insurance on his life or the life of his spouse, or on his own life or the life of his spouse contracting for deferred annuity, and a rent relief of N200,000 or 20 per cent of the annual rent paid, whichever is less, provided that the person furnishes the actual amount of rent paid and other relevant information as determined by the relevant tax authority Makes an accurate announcement.
Nonetheless, Yahya said, “The Forum notes with disappointment the contents of the recent tax reform bill that was sent to the National Assembly. The contents of the Bill are against the interests of North and other sub-nationals, especially the proposed amendments in the distribution of Value Added Tax (VAT) to the derivation-based model.
“This is because companies collect VAT using the location of their headquarters and tax office, and not where the services and goods are consumed.
“In view of the foregoing, the Forum unanimously rejects the proposed tax amendments and calls on members of the National Assembly to oppose any bill that could jeopardize the well-being of our people.”
The governor said, “For the avoidance of doubt, the Northern Governors Forum is not against any policy or program that will ensure the growth and development of the country.
“However, the platform calls for equity and foresight in the implementation of all national policies and programs to ensure that no geopolitical zone remains under-represented or marginalised.”
On the current economic hardship in the country, the northern governors appealed to all citizens to remain calm and said the state and federal government are working hard to implement measures that will mitigate the effects of the hardship.
The platform stressed that traditional institutions were vital in the quest for lasting peace and security in the North and that they should partner with security agencies in the fight against banditry, cattle rustling, communal clashes, farmers/herdsmen clashes and other forms of criminality. Was requested to cooperate. ,
The governors also commended the Chief of Defense Staff, General Christopher Musa, who briefed the meeting on efforts being made to tackle insecurity in the North, noting that his “professionalism and innovative approach has made a difference to the country’s security architecture.” Have brought.” “Excessive”.
However, the governors said more was needed to address the challenges facing the region.
The release further said, “With the recent ‘End Bad Governance’ protests in August, it has strengthened efforts to tackle the root causes of youth restlessness by investing in education, skills development, job creation and pathways for youth. Have resolved to increase it.” “The youth should channelize their energies into productive ventures, thereby reducing their susceptibility to crime and social evils.”
The forum also condemned the current power blackout in most parts of the northern states and called on the Federal Government and relevant agencies to urgently address the situation arising due to vandalism of power transmission infrastructure.
“This case underscores not only the vulnerability of critical infrastructure, but also the need to build additional transmission lines and diversify our energy supply to better connect our region,” the release said. and improve our energy resilience.”
It said the North has immense agricultural potential, which if fully exploited, could reduce hunger to a great extent and promote economic growth.
“To achieve this, we have pledged to provide adequate support to our farmers, including access to financing, modern farming techniques and infrastructure such as roads and irrigation systems,” it said.
“Agriculture must be seen not only as a means to feed our people, but also as a catalyst for industrialization and job creation across the region.
“This can be achieved through re-industrialization of the North, especially by revitalizing the textile value chain and through the development of other agro-allied industries.”
Yahaya said, “The Forum commends His Excellency the President and Commander-in-Chief of the Armed Forces of the Federal Republic of Nigeria for the reform initiative in the livestock sub-sector and agrees to provide the necessary political will and commitment to ensure that It has happened.” Success of the Livestock Development Initiative of the Federal Government.
“The Forum also agreed to maintain engagement and cross-fertilization of ideas with the Presidential Livestock Reform Implementation Committee to achieve better results.
The Forum acknowledges the fact that climate change has greatly impacted our environment resulting in recent flood events in many parts of the North and hence, there is a need for irrigation infrastructure such as canals and waterways to divert excess water. It has pledged to partner with the federal government and other stakeholders for construction. Provide water and divert it towards irrigation activities, which will enhance rural livelihoods and secure food security.
The meeting was attended by the governors of Zamfara, Borno, Bauchi, Adamawa, Kogi, Yobe, Gombe, Kaduna, Nasarawa and Kwara states.
The governors of Plateau, Benue, Katsina, Kano, Jigawa, Sokoto, Kebbi, Taraba and Niger were represented by their representatives and secretaries to the state governments.
James Emejo and John Shiklam
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