Reps move to give tax relief to loss-making companies

A new bill that would allow companies experiencing financial losses to avoid paying a minimum income tax has passed its second reading in the House of Representatives.

The bill aims to modify the Companies Income Tax Act to provide better protection for businesses and companies that are not making a profit in a given year.

Sponsored by Oboku Oforji from Bayelsa, the bill successfully passed its second reading during a legislative session on Thursday.

Currently, existing law requires that companies with no taxable profits must still pay a minimum tax. This minimum tax is 0.5 per cent of the company’s total revenue, excluding certain investment income.

The proposed legislation would change this rule. It seeks to create a new exception that would allow companies reporting financial losses to skip paying the minimum tax for that year.

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During the debate, Oforji explained the bill’s purpose. He argued that the amendment would bring fairness to businesses, especially given the current economic challenges that have caused many companies to struggle and lose money.

“This amendment primarily proposes to exempt certain companies from paying minimum tax in years when they are experiencing financial losses,” Oforji stated.

James Faleke, who leads the finance committee, supported the bill. He noted that this amendment is part of the tax reform initiatives proposed by President Bola Tinubu.

The bill was approved when the house speaker, Tajudeen Abbas, called for a voice vote, with lawmakers vocally supporting the proposed change.