Economy
Nigeria to Phase Out Obsolete Pioneer Tax Exemptions
By Dipo Olowookere
The federal government has disclosed that it plans to phase out some old pioneer tax exemptions granted to some companies as it looks to bolster its revenue to cut its fiscal deficits.
The government has expressed concern over the country’s debt burden, and with earnings from crude oil sales not improving, it is looking toward taxes to generate more funds.
Last month, the Debt Management Office (DMO) said the total debt profile of Nigeria increased by 2.98 per cent on a quarter-on-quarter basis to N42.84 trillion in June 2022 from N41.60 trillion in March 2022.
It explained that the total public debt stock of N42.84 trillion comprises the funds borrowed by the federal government, the 36 state governments and the Federal Capital Territory (FCT).
In Dollar terms, the money owed by Nigeria stood at $103.31 billion as of June 30, 2022, in contrast to $100.07 billion as of March 31, 2022.
Last week, the International Monetary Fund (IMF) expressed concerns over the debt burden of Nigeria, advising the government to use proceeds from oil sales to reduce the fiscal deficit.
The federal government, through the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, agrees that something must be done to slice the debt burden, but this can be done by increasing taxes and not earnings from crude oil.
At a workshop on tax expenditure in Abuja, she said that the government would commence the rationalisation of tax exemptions by phasing out antiquated pioneers and other tax incentives for matured industries.
According to her, contrary to what was obtained in the past, the country is reaping the benefits of tax exemptions and concessions given to small businesses.
“A lot has changed, the system is more transparent, and tax expenditure that government has given which is a tax for a bond, is to encourage ailing and infant industries to do more and employ more youths,” the Minister, represented by the Director, Technical Services in the Ministry, Ms Fatima Hayatu, said.
Mrs Ahmed further said the government would introduce some taxes to generate more funds to repay the loans from various sources, including China, the World Bank, and the IMF.
Mrs Ahmed expressed confidence that if the government introduces more taxes or expands the current tax base and block revenue leakages, the nation would have more funds to ease the debt burden.
“The debt is not something that cannot be surmounted. The programme is to block leakages where the taxes are being diverted.
“So, if we block leakages, and if it is transparent, Nigeria will borrow less, and we will have more money to finance other sectors,” the Minister said at the programme organised by the ECOWAS Commission under the Context of the Implementation of the Support Programme for Tax Transition in West Africa (PATF).
She reemphasised that, “If we have more taxes and redirect the taxes to the right fiscal sectors of our economy, we will reduce our debt burden.
“It is not as if the debt is beyond what the government can handle. If you look at the debt to the Gross Domestic Product (GDP) ratio, I think the government is doing well.”
Business Post reports that the workshop was put together to examine directives on the harmonisation of tax expenditure management practices and the monitoring and evaluation of tax transition in ECOWAS member states.
By Adedapo Adesanya
The Nigerian Exchange (NGX) Limited is seeking review of the controversial Capital Gains Tax increase, fearing it will chase away foreign investors from the country’s capital market.
Nigeria’s new tax regime, which takes effect from January 1, 2026, represents one of the most significant changes to Nigeria’s tax system in recent years.
Under the new rules, the flat 10 per cent Capital Gains Tax rate has been replaced by progressive income tax rates ranging from zero to 30 per cent, depending on an investor’s overall income or profit level while large corporate investors will see the top rate reduced to 25 per cent as part of a wider corporate tax reform.
The chief executive of NGX, Mr Jude Chiemeka, said in a Bloomberg interview in Kigali, Rwanda that there should be a “removal of the capital gains tax completely, or perhaps deferring it for five years.”
According to him, Nigeria, having a higher Capital Gains Tax, will make investors redirect asset allocation to frontier markets and “countries that have less tax.”
“From a capital flow perspective, we should be concerned because all these international portfolio managers that invest across frontier markets will certainly go to where the cost of investing is not so burdensome,” the CEO said, as per Bloomberg. “That is really the angle one will look at it from.”
Meanwhile, the policy has been defended by the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, who noted that the new tax will make investing in the capital market more attractive by reducing risks, promoting fairness, and simplifying compliance.
He noted that the framework allows investors to deduct legitimate costs such as brokerage fees, regulatory charges, realised capital losses, margin interest, and foreign exchange losses directly tied to investments, thereby ensuring that they are not taxed when operating at a loss.
Mr Oyedele also said the reforms introduced a more inclusive approach to taxation by exempting several categories of investors and transactions.
By Adedapo Adesanya
Food Concepts Plc neutralized the gains recorded by three securities, returning the NASD Over-the-Counter (OTC) Securities Exchange into the negative territory with a 0.27 per cent loss on Thursday, December 4.
Yesterday, the share price of the parent company of Chicken Republic and PieXpress declined by 34 Kobo to sell at N3.15 per unit compared with the previous day’s N3.49 per unit.
This shrank the market capitalisation of the OTC bourse by N5.72 billion to N2.136 billion from N2.142 trillion and weakened the NASD Unlisted Security Index (NSI) by 9.57 points to 3,571.53 points from 3,581.10 points.
Business Post reports that Central Securities Clearing System (CSCS) Plc went down by 50 Kobo to N38.50 per share from N38.00 per share, FrieslandCampina Wamco Nigeria Plc gained 29 Kobo to sell at N55.79 per unit versus N55.50 per unit, and Geo-Fluids Plc added 5 Kobo to close at N4.60 per share compared with Wednesday’s closing price of N4.55 per share.
Trading data indicated that the volume of securities recorded at the session surged by 6,885.3 per cent to 4.3 million units from the 61,570 units posted a day earlier, the value of securities increased by 10,301.7 per cent to N947.2 million from N3.3 million, and the number of deals went up by 146.7 per cent to 37 deals from the 15 deals achieved in the previous trading session.
At the close of business, Infrastructure Credit Guarantee Company (InfraCredit) Plc was the most traded stock by value on a year-to-date basis with the sale of 5.8 billion units for N16.4 billion, trailed by Okitipupa Plc with 170.4 million units worth N8.0 billion, and Air Liquide Plc with 507.5 million units valued at N4.2 billion.
InfraCredit Plc also finished the session as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Dipo Olowookere
The upward trend witnessed at the Nigerian Exchange (NGX) Limited in recent sessions continued on Thursday as it further improved by 0.10 per cent.
This was despite investor sentiment turning bearish after the local equity market ended with 23 price gainers and 28 price gainers, indicating a negative market breadth index.
UAC Nigeria gained 10.00 per cent to finish at N88.00, Morison Industries appreciated by 9.94 per cent to N3.54, Ecobank rose by 8.53 per cent to N36.90, and Coronation Insurance grew by 8.47 per cent to N2.56.
On the flip side, Ellah Lakes depreciated by 10.00 per cent to N13.14, Eunisell Nigeria also shed 10.00 per cent to finish at N72.90, Transcorp Hotels slipped by 9.95 per cent to N157.50, Omatek shrank by 9.23 per cent to N1.18, and Guinea Insurance dipped by 8.46 per cent to N1.19.
Yesterday, the All-Share Index (ASI) went up by 152.28 points to 145,476.15 points from 145,323.87 points and the market capitalisation chalked up N97 billion to finish at N92.726 trillion compared with the previous day’s N92.629 trillion.
Customs Street was bubbling with activities on Thursday, though the trading volume and value slightly went down, according to data.
A total of 1.9 billion stocks worth N19.2 billion exchanged hands in 23,369 deals during the session versus the N2.3 billion valued at N21.0 billion traded in 21,513 deals a day earlier.
This showed that the number of deals increased by 8.63 per cent, the volume of transactions depleted by 17.39 per cent, and the value of trades decreased by 8.57 per cent.
For another trading day, eTranzact led the activity chart with 1.6 billion units sold for N6.4 billion, Fidelity Bank traded 31.0 million units worth N589.3 million, GTCO exchanged 28.3 million units valued at N2.5 billion, Zenith Bank transacted 27.1 million units for N1.6 billion, and Ecobank traded 21.9 million units worth N744.3 million.
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