ENTREPRENEURIAL DEVELOPMENT

Tax Incentives: FG Denies $20bn Revenue Loss to Companies

Yemi Akinsuyi The federal government at the weekend maintained that the allegations of purported wrongful grant of Pioneer Status Incentive to undeserving companies by the Nigerian Investment Promotion Commission (NIPC) between 2010 and 2014 and the resultant loss of revenue to the tune of $20billion, were not true.

The federal government said though the allegations published in a daily newspaper was credited to the Co-ordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, she has since refuted the fraud allegations and clarified that she only made some observations on the impact of the Pioneer Status Incentive on government revenue some nine months ago.

It explained in a statement released in Abuja that the issues had since been streamlined in line with the ongoing reforms in the Tax Administration System and Fiscal Policy Reforms, which entailed the review of the Pioneer Status Incentive administration by an InterMinisterial Committee made up of Ministry of Industry Trade and Investment, NIPC, Federal Inland Revenue Service (FIRS) and the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC).

It expressed worry over the publication’s “negative impact on the integrity of the highly reputable Nigerian company, Messrs Seplat Petroleum Development Company Plc, that has attained the enviable feats of being listed and successfully trading in the Nigerian and London Stock Exchanges.”

The statement, jointly signed by MITI, NIPC, FIRS and RMAFC, maintained that “there is no established case of fraud in granting Pioneer Status Incentive to companies by NIPC as alleged, because the approval to grant Pioneer Status Incentive to Nigerian owned oil companies was duly approved by the federal government.

“Going forward, the InterMinisterial Committee on the Review of the Pioneer Status Administration, collectively agreed that certain sectors considered mature should be delisted from pioneer schedule, while new priority sectors be enlisted based on the ongoing Impact Assessment Exercise being undertaken by Messrs Akintola Williams Deloitte.”

It added: “The Pioneer Status Incentives granted to Marginal Oil Field Operators/Nigerian owned oil companies is in line with the local content policy of the government to promote Nigerian content development, local capacity and capabilities.

“It was also designed to enhance the positioning of Nigerian oil firms to take control of the oil industry in the wake of divestment by the International Oil Companies (IOCs).

“For instance, it has been established that the contribution of the indigenous oil companies to national oil production level has increased from three percent to nine per cent as a result of the grant of Pioneer Status Incentive.”

While maintaining that there was no such thing as “revenue loss of $20billion” as a result of the grant of Pioneer Status Incentive as alleged in the publication, the statement said: “The figure is to say the least, unrealistic, speculative and lack any material basis.

“Given that not more than 400 companies benefited from the grant of Pioneer Status Incentive by the NIPC since its inception, it should be pointed out that the savings made by the beneficiary companies of Pioneer Incentive is less than five per cent of the alleged revenue loss.

“Even then, the cost benefit of the Pioneer Status Incentive granted has enabled these companies to expand and diversify as noticeable in the cement, telecommunication, iron and steel, petrochemicals, agriculture and agric-business, automobile industries etc,” it further explained.