13 October 2017

Nigeria: Govt Cautioned On Granting Long-Term Tax Incentives

Abuja — The Civil Society Legislative Advocacy Centre (CISLAC) has cautioned the Federal Government to avoid institutionalising a policy on the use of granting long-term tax incentives to corporate businesses to achieve project implementation.

This it said would create a distorted fiscal picture necessary for sustainable revenue and expenditure planning for infrastructural development, adding that it is also susceptible to abuse and creation of complex tax administration frameworks that would result in long term revenue loss to the nation.

CISLAC also called on the Minister of Finance, Mrs. Kemi Adeosun to review the decision and ensure that this practice is stopped to avoid setting a dangerous trend that would hurt the nation in the long run.

Besides, the group also called on President Muhammadu Buhari to resign as the Minister of Petroleum Resources to allow for better management of the Nigeria's oil and gas sector.

A statement signed by the Executive Director, CISLAC, Auwal Ibrahim Musa in Abuja, said the failure of government to deliver on its promise to Nigerians on infrastructure development, after over two years in office, due to the financial challenges because of dwindling revenues from oil, is driving her into panic mode and making her resort to desperate measures, including falling back on discredited and obsolete approach of handing out tax incentives to show results, probably for electioneering campaign prelude to 2019.

Musa added that the arrangement reached with the Dangote Group to offer tax incentive in exchange for road construction falls within the purview of the CITA (Exemption of Profits Order 2012), noting that the new National Tax Policy envisages that tax incentives are sector based and not directed at entities or persons that should provide a net benefit to the country, and equally available to all persons in the same class and be very clear and avoid ambiguity.

Auwal said it was clear that Baru and Kachikwu have not been in good terms, hence the present corruption allegations rocking the oil sector. Also, an Abuja-based oil and gas analyst, Ifeanyi Izeze, said that it has been obvious that the gulf between the Ministry of Petroleum Resources and the NNPC seemed to have widened, as manifested by the issue of the actual cost of producing one barrel of crude oil in Nigeria.

He cited example with the conflicting cost of producing a barrel of crude oil in which Baru said that it cost $23 to produce a barrel of crude oil and Kachikwu later declared that of cost of remains at about $32.

According to Izeze, if the two topmost government officials in the sector could publicly disagree, then without doubt, it is either there is a communication gap or supremacy tussle between Kachikwu and Baru.

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