News & Insights

FG to review tax exemption for pioneer firms

FG to review tax exemption for pioneer firms

The Federal Inland Revenue Service has accused some multinationals operating in Nigeria of not paying the required tax to government by lying on their pioneer status to get tax exemption for five years instead of the three years prescribed by the law.

It is therefore seeking the support of the National Assembly to amend the laws regarding pioneer status for companies, in order to check abuses.

The revenue agency also said that some Ministries, Departments and Agencies of the Federal Government refused to comply with the new Value Added Tax rate of 7.5 per cent.

 

According to the FIRS, the MDAs are insisting that the contracts they awarded were based on the old five per cent rate and, therefore, could not pay the 7.5 per cent at the point of consumption.

The Executive Chairman of the FIRS, Muhammad Nami, made these known to the House of Representatives in Abuja on Monday when he appeared before the Committee on Finance.

He disclosed that the service had sent an executive bill to the President, Major General Muhammadu Buhari (retd.), through the Office of the Attorney General of the Federation seeking an executive order.

Nami said the executive order was for the use of technology to monitor transactions in the non-oil sector.

The FIRS boss decried under remittance of taxes in the petroleum sector as some multinationals were reportedly hiding under the pioneer status clause in the laws to evade paying taxes.

He added that while the law allowed a three-year tax holiday based on the pioneer status, the companies resorted to retooling their factories and applying for another two-year tax holiday.

The FIRS added that technology would be connected to supermarkets and other business premises to enable the service to monitor transactions.

The FIRS boss also disclosed that a transfer analysis carried out by the service indicated that in 2019 alone, about 613 trillion transactions were carried out by Nigerians, pointing out that they were analysing the transactions to determine the number that qualified for the 50 kobo stamp duty.

He expressed confidence that a minimum of between 30 and 40 per cent of the total transaction would qualify for payment of the 50 kobo stamp duty, adding that the stamp duty revenue warehoused in the CBN stood at about N45bn.

source:- https://thenigerialawyer.com/fg-to-review-tax-exemption-for-pioneer-firms/