Oil Producers, MAN, ICAN Fault Provisions of Executive Finance Bill

House members shun public hearing

Oil producers under the aegis of Oil Producers Trade Section (OPTS) of Lagos Chamber of Commerce and Industry (LCCI); Manufacturers Association of Nigeria (MAN) and Institute of Chartered Accountants of Nigeria (ICAN) have opposed some provisions of the 2019 Finance Bill the executive sent last month to the National Assembly for approval.

This is coming just as the members of the House of Representatives committee on Finance yesterday shunned the public hearing on the 2019 Finance Bill organised by the National Assembly joint committee on Finance.

The three organisations in separate presentations yesterday at the public hearing on the Nigeria Tax and Fiscal Law (Amendment) Bill (The Finance Bill) 2019 opposed the introduction of additional taxes as well as other provisions of the bill.

On its part, the Oil Producers Trade Section (OPTS), was of the view that additional taxes, such as those proposed in the Bill, “will further increase oil production costs and tax burden, thereby constituting another significant challenge to Nigeria’s attractiveness for new investment.”

The group in a presentation by its Chairman, Paul McGrath, stressed that the additional taxes will further erode Nigeria’s competitiveness in the global oil and gas industry to the advantage of other countries. Nigeria, according to him, is currently struggling to attract investment in the oil & gas sector, having received only three per cent out of the $73 billion of major project investments in Africa from 2015 to 2019.

OPTS identified some key areas of concern that could significantly erode Nigeria’s competitiveness which include Section 5 & 26, introducing 7.5-10 per cent withholding tax (WHT) on dividends paid out of petroleum profits which would increase the tax liability in addition to the pre-existing 85 per cent PPT rate and erode returns on investment.

“OPTS suggests that this proposal be removed from the Bill, and instead considered within the wider context of a Petroleum Industry Bill, so that its full implications for all stakeholders can be assessed and decided upon.

“In Sections 3(c), and 3(d) the definition of the profits of a foreign company subject to Nigerian corporate income tax with significant economic presence has been expanded in such a way that intra-company transactions are now likely to be subject to WHT of 10 per cent. The determination of what constitutes significant economic presence of a company has been left to the discretion of the Minister.

He further submitted that “it is our view that we should address taxation within a holistic fiscal package consistent with Federal Government of Nigeria’s objectives of sustainable long-term growth”.

MAN, in a presentation by Rasaq Okulaja canvassed for the exemption of companies with less than N20million capital base from company income tax.

He said payment of stamp duty should be for transactions from N100,000 and above.

While backing the introduction of tax on luxury items, MAN, however, called for caution on the part of government not to drive away genuine investors.

Also speaking, ICAN President, Nnamdi Okwuadigbo, canvassed for the review of

using turnover only as a criteria for exempting a small firm from Company Income Tax (CIT). According to him, there are companies which are viable with turnover less than N25 million and could be brought to the tax net “while a company may have a high turnover but less viable and the tax rate for companies with turnover of over N100 million should be clearly stated”.

While supporting the proposed linking of Tax Identification

Number (TIN) with the bank account, he however stated that the informal sector of the economy which supports the main sector is usually left out of the tax net “as taxing such class of service providers, will not invalidate the federal government noble gesture of supporting the SMEs”.

Okwuadigbo emphasised that while ICAN appreciates that Petroleum Profit Tax is a legal fiscal tool of the federal government, “it should also be noted that corporate bodies with shareholders are expected to pay dividends to their shareholders as continuous failure to pay dividends can lead to the eventual reduction of the value of stock holding by shareholders.