Oyedele pledges major tax relief, incentives for manufacturers

Taiwo Oyedele, chairman of Nigeria’s Presidential Committee on Fiscal Policy and Tax Reforms, has announced sweeping tax relief measures and incentives for manufacturers in the new tax laws.

Oyedele who made this known on Thursday in Lagos during a stakeholders’engagement with the manufacturers Association of Nigeria (MAN), themed ‘From Legislative Assembly to Factory Floor: What the New Tax Laws Mean for Nigerian Manufacturers,’ clarify some grey areas pertaining to the law’s implementation for the manufacturing sector while assuring stakeholders on broad sectoral gains.

According to him, some key benefits for the sector include tax exemption on locally manufactured sanitary towels, pads or tampons and assistive devices and disability-related products; zero-rated tax on fertilizer, locally produced agricultural chemicals, veterinary medicine, and animal feeds; probable suspension of VAT on petroleum products, renewable energy equipment, Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG), and other gaseous hydrocarbon by Order from the Minister.

Other benefits include, deduction on VAT for research and development capped at 5 percent of yearly turnover; faster and clearer rules for tax offsets and refunds; and rationalisation of free trade zone tax status amongst others.

He explained that to ensure a seamless implementation process, an ombudsman is bring set up to provide tax payers with support and clarity as they navigate this new phase.

Other incentives for manufacturers include; full input VAT recovery for goods and services signalling a major shift especially for service businesses; mandatory e-invoicing, localisation and real-time reporting, and fairer state revenue sharing.

Oyedele noted that to take advantage of these gains while strengthening compliance, stakeholders must farmiliarise themselves with the law from credible sources while paying attention to their individual and corporate obligations.

Read also: Taiwo Oyedele says VAT reforms needed to protect the poor

“My encouragement to you is that you seek to be informed based on the source itself. Copies of the tax laws are available. You can read it if you’re able to read. If not, go to credible sources. We have put out a lot of summary information that you can rely on, including the one we are sharing here today,” he said.

“Secondly, stakeholders should pay attention to where they have obligations. I told you that you’ll be entitled to input VAT credit, which will save you a lot of costs and cash flow benefits. To get these cash flow benefits, you must keep records,” He explained.

“If you are doing business and you buy things and you don’t keep the record, you can’t claim the input VAT. That is your responsibility to play your part,” he added.

On his part Francis Meshioye, the president of MAN, said that to sustain a favourable business climate, government should make the business environment more efficient so that business can prosper. This, he said, will culminate in a win-win situation for both manufacturers and the government.

“If the government creates an enabler for manufacturers to do more business, then definitely, the government will get the tax on those businesses that we do. The government will get much more money from the larger volume of business that we do than getting a larger percentage from doing little business.

“Having a business environment that really creates value addition and grow businesses will definitely generate more taxes. It is in the interest of the state government to keep the agreement on the joint tax force so that the manufacturers’ confidence is strengthened and the environment is more viable for business growth,” he remarked.

Meanwhile, Segun Ajayi-Kadir, director general of MAN, explained that the passing of the new tax law by states signals a positive move noting that this will eliminate duplicity in the new tax regime.

“The engagement we had with the Chairman of the Presidential Committee on the tax reform was actually to make the law granular and he has been able to explain,” he said.

“But we all know that successful tax policies would require full alignment between the state, the local government and the federal government. The sub nationals must be carried along. And luckily like he announced, we now have about 10 states that have passed laws that are in alignment with the federal law.”

He urged manufacturers to study the reforms carefully and take full advantage of the opportunities they offer, noting that the engagement was aimed at bridging the gap between policy formulation and real-sector implementation.

Josephine Okojie-Okeiyi is a journalist with over five years’ reporting experience. She writes on industry, agriculture, commodities, climate change, and environmental issues. She is fellow of Thomson Reuters Foundation and Bloomberg Media Initiative for Africa.

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