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New Tax Laws Will Favour Nigerian Workers, States—Oyedele

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Withholding Tax

By Adedapo Adesanya

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, says the tax reform bills proposed by the administration of President Bola Tinubu will lift the tax burden on 90 per cent of Nigerian workers.

He gave this clarification while appearing before senators during the plenary to brief the lawmakers on the need to pass the bills on Wednesday.

He also explained that the bills aim to review the sharing formula of the Value Added Tax (VAT) to accommodate what each state will get for what is consumed within their territory.

Recall that in September, President Tinubu transmitted four tax bills to the National Assembly for approval. These are the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.

One of the bills seeks to change the sharing formula of the Value Added Tax by reducing the federal government’s share from 15 per cent to 10 per cent. However, the bill includes a caveat that the allocation among states will factor in the derivation principle.

Mr Oyedele said if the bills are passed and assented to by the president, 30 per cent of Nigerians who earn between N50,000 to N70,000 monthly will be exempted from paying tax to the government because they are classified as poor people.

“These proposals, if approved by the Senate, will reduce the tax on 90 per cent of our workers, both in the private and the public sector, and it will exempt more than 30 per cent of our citizens who earn about minimum wage, around 50,000, 60,000, 70,000 Naira,” he said.

Mr Oyedele noted that Nigerian workers who earn above N70,000 monthly will commit to payment of taxes.

He explained that those earning N100 million monthly will pay 25 per cent of their income as tax.

“Then the remaining 10 per cent who are not so poor will now pay a little bit more. The top rate today is 24 per cent in the long, and we are proposing it goes to 25 per cent. We are doing some other reforms around allowances and relief.

“So effectively, if somebody earns 100 million Naira a month, the maximum they will pay even on that approval side is only 25 per cent. If they were in South Africa, they would be paying 41 per cent. If they were in Kenya, they would be paying 35 per cent. Of course, if they were in the UK or the US, they would be close to 40 per cent, but we are doing only 25 per cent.”

He also noted there will be changes to VAT sharing formula, adding the tax reform bills prescribed that every state will receive credit for consumption within their territory and that the state government will only have power to collect sales tax, leaving the tax on import and international services for the federal government.

“Our proposal before you is that going forward, if we have your approval for the bills, every state will receive credit for the consumption within their territory.

“Number one, every state will collect less than half of what they are getting now. Number two, businesses will struggle because you bought something in Kaduna and you are selling it in FCT. They will not allow you for the input, and the more the cost piles up, the more businesses will struggle,” he added.

He further explained that, “If states should begin to collect VAT today, they will not be able to collect import VAT. Import VAT and international VAT is about half the VAT we collect in Nigeria today. If anybody could benefit at all, it would be the federal government,” he added.

Mr Oyedele emphasised that each state will get credit for economic activities within their jurisdiction.

Mr Oyedele also said the tax reform bills will review the percentage formula for sharing VAT by the federal, state and local governments.

The current formula for sharing VAT prescribes that the federal government should take 15 per cent, the states 50 per cent and the local government 35 per cent.

The tax man noted that the reform bills will review the VAT sharing formula and make states the largest receivers among the three tier of government, as it will take 5 per cent from the FG.

“10 per cent (will go to the) federal government, 55 per cent state government and 35 per cent local government,” he said, “Provided that 60 per cent of the amount standing to the credit of states and local governments shall be distributed among them on the basis of derivation.”

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Economy

OPEC+ Retains Nigeria’s Output Benchmark at 1.5mbpd

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By Adedapo Adesanya

Nigeria’s daily oil production quota will remain unchanged at 1.5 million barrels per day after the Organisation of Petroleum Exporting Countries and its allies (OPEC+) on Thursday deferred the commencement of its proposed oil production cuts by a year, until the end of 2026.

The move was necessitated by weak demand and rising output by non-members of the international oil cartel.

OPEC sets a production target for its members as a way of curbing oversupply and ensuring price stability.

The alliance agreed to extend the 2 million barrels per day and the 1.65 million barrels per day of cuts until the end of 2026 from the end of 2025 respectively, according to statements issued by the group on Thursday.

However, Nigeria which has been a laggard struggled for years to meet its monthly allocation of 1.78 million barrels per day minus condensates as prescribed by the group.

The country quota was revised then downwards to 1.5 million barrels per day in 2022.

Under its formal output strategy, the broader OPEC+ coalition is now restricting its combined production to 39.725 million barrels per day until December 31, 2026, after previously only applying this quota throughout 2025.

However, eight OPEC+ members — Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman — will now extend their 2.2 million barrels per day voluntary production decline into the first quarter, and will begin hiking production incrementally between April and September 2026.

Nigeria, unable to meet its 1.5 million barrels per day, does not belong to this exclusive group. OPEC data puts Africa’s largest oil producer numbers at 1.3 million barrels on average.

Saudi Arabia’s quota will stand at 10.47 million barrels per day; Russia’s at 9.94 million barrels per day; Iraq’s at 4.43 million barrels per day production and Algeria’s at 1 million barrels per day output.

Despite these sets of production trims and ongoing conflict threatening the hydrocarbon-rich Middle Eastern region, global oil prices have remained subdued for the better part of this year, under pressure from a tepid demand outlook.

Brent crude, which Nigeria leverages its headline crude against, is currently trading at $72 per barrel.

Meanwhile, Nigeria has set an ambitious 2025 production target of 2.06 million barrels per day, inclusive of condensates, as outlined in the draft 2025 appropriation bill of N48.7 trillion. The bill also sets a $77 per barrel benchmark to fund the budget.

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Economy

LCCI Predicts 4% GDP Growth For 2024 Amid Economic Challenges

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By Adedapo Adesanya

The Lagos Chamber of Commerce and Industry (LCCI) foresees Nigeria’s economy closing the current year in positive growth up to 4 per cent.

This was disclosed by the president of the chamber, Mr Gabriel Idahosa, at the organisation’s Annual General Meeting (AGM) on Thursday in Lagos.

The LCCI forecast builds up on recent gross domestic product (GDP) released by the National Bureau of Statistics (NBS) which points out that Nigeria’s economy grew 3.46 per cent in the third quarter of 2024.

The body said achieving faster recovery requires the fiscal and monetary sides of the economy to promote policies that would encourage private capital flows to the economy.

According to him, fiscal and monetary authorities need to develop a medium-term growth plan anchored on boosting local production, supporting ease of doing business and attracting private investment.

Mr Idahosa said the plan should also focus on developing infrastructure, business-friendly regulatory policies, economic diversification, and employment generation.

“Nigeria is presently confronted with a myriad of challenges including sustained double-digit inflation, a steadily rising debt profile, revenue mobilisation challenges and others.

“We have advocated for a well-coordinated synergy between the fiscal and monetary authorities in engagement with the private sector to navigate the uncertain economic terrain.

“We will continue to engage with government in creating an enabling business environment where the private sector is empowered to grow, create jobs and generate revenue for the government,” he said.

Addressing some economic indices, the LCCI president noted that the private sector was currently plagued with increased borrowing costs and a pressured foreign exchange market.

He said recent hikes in the Monetary Policy Rate (MPR) had directly translated to higher interest rates, making it more expensive for businesses to access credit for working capital, expansion, and sustainability.

He said that rate hikes alone would not curb inflation without resolving the challenges of the real sector of the economy.

Mr Idahosa added that the country needed to diversify its exports by boosting local crude refining capacity production of petrochemical products and accelerating reforms in the and gas sector.

“The chamber looks forward to the sustained implementation of naira payments for crude oil sales to the Dangote refinery and other local refineries, which started on October 1, 2024.

“We urge the government to summon the courage to be consistent with the oil and gas sector reforms and implement the Petroleum Industry Act (PIA) fully.

“We see the long-term gains of these reforms if they are implemented under a conducive regulatory environment,” he said.

Speaking on the projected N47.9 trillion 2025 budget presented recently by President Bola Tinubu, Mr Idahosa said the key parameters and assumptions on which the budget was proposed were too optimistic in the face of some economic and social indicators.

On her part, Mrs Chinyere Almona, Director General, LCCI, urged government to create an enabling environment for businesses to thrive to enhance their productivity and contribute more meaningfully to the economy.

She noted that while the year was filled with very difficult reforms, businesses should stay the course on these reforms and things would improve.

Mrs Almona urged businesses to think of alternatives to improve efficiency, attract finance and be more productive, while hoping for the next year to be better.

She also called on authorities to focus on non-oil exports to attract more foreign exchange.

“When we talk of exports, we are not just talking of exporting raw materials but processing materials to command top dollar in the export market.

“At the chamber, we are looking for ways to improve our export and small and medium enterprises (SMEs) groups to improve their capacity and productivity to export more, ” she said.

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Economy

FrieslandCampina Sinks Unlisted Securities Exchange by 0.20%

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unlisted securities exchange

By Adedapo Adesanya

FrieslandCampina Wamco Nigeria Plc pulled down the NASD Over-the-Counter (OTC) Securities Exchange by 0.20 per cent fall on Thursday, December 5.

The bourse, as a result, lost N2.14 billion as the market capitalisation wrapped the session at N1.056 trillion compared with the N1.058 trillion it closed in the preceding session.

Equally, the NASD Unlisted Security Index (NSI) dropped 6.13 points to settle for the session at 3,013.41 points compared with 3,019.54 points recorded on Wednesday.

During the trading day, the price of FrieslandCampina Wamco Nigeria Plc went down by N1.10 to trade at N40.36 per share versus the N41.46 per share it ended at midweek.

Yesterday, the volume of shares bought and sold by the market participants significantly decreased by 99.9 per cent to 74,381 units from the 127.5 million units traded in the preceding session.

In the same vein, the value of securities transacted by investors on Thursday shrank by 95.4 per cent to N2.7 million from N58.2 million, as the number of deals depreciated by 75 per cent to five deals from the 20 deals recorded a day earlier.

Geo-Fluids Plc remained the most traded stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, Okitipupa Plc came next with 752.2 million units sold for N7.8 billion, and Afriland Properties Plc was in third place after trading 297.3 million units worth N5.3 million.

Despite its exit from the trading platform, Aradel Holdings Plc remained the most traded stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 billion.

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