Nigeria dangles incentives to lure more investments into economy

The federal government has on Friday unveiled ‎a compendium of investment incentives to attract more investment inflow into its rebounding economy, while also preparing the ground for more Foreign Direct Investment (FDI) into the economy.

The compendium Investment incentives which is based on 2016 Fiscal Policy are brought under six sectors and are broadly divided into four sections which include: Investment Policies and Protections;tax-based incentives; Tariff-based incentives and Special Economic Zones.

‎It is also aimed at raising awareness of investment incentives in Nigeria, the relevant administering agencies, and to serve as a useful guide in making informed investment decisions for investors seeking to invest in Nigeria, as part of ease of doing business drive of the present administrations.

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“In compiling the compendium, great care was taken to ensure completeness and accuracy. Efforts were made to ensure that all incentives presented ‎in the compendium are backed by law or have been gazetted,” said Yewande Sadiku, Executive Secretary of NIPC, and Tunde Fowler, Executive Chairman of FIRS, said in a joint Press conference on Friday.

‎Under the Investment Policies and Protections section, as regards bilateral investment treaties on double taxation agreements, the compendium states that “The agreements make provisions for the elimination of double taxation concerning taxes on income and capital gains.

Furthermore, as regards Investment Promotion and protection agreement,( IIPA ) it seeks reciprocal promotion and protection of investments by individuals and companies in the territories of participating states.

‎Also, regarding general tax-based incentives, Tax credit allowable against tax payable on income derived from outside Nigeria, according to section 11 of Personal Income Tax Act (PITA)states that “Where a resident derives income from a source outside Nigeria and the income is brought into Nigeria through Government approved channels, he shall be allowed a tax credit against the tax payable by him, but tax credit shall not exceed the proportion of his total tax for the year of assessment which that income derived from outside and brought into Nigeria bears to his aggregate income chargeable to tax in Nigeria.

‎On general Tax based incentives, the exemption from value-added tax according to sections 2&3 First Schedule VAT Act lists the goods and services exempted from VAT on goods to include: All medical and pharmaceutical products; Basic food items, Books and educational materials; baby products, and fertilizer.

Also included include in the General Tax based incentives are: locally produced agricultural and veterinary medicine, farming machinery and farming transportation equipment; all exports, plant and machinery imported for use in Export processing zones; plants ‎machinery and equipment purchased for utilisation in gas down-stream petroleum operations, and Tractors, ploughs and agricultural equipment and implements purchased for Agricultural purposes.

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Also on the general tax incentives. Medical services, services rendered by community Banks, Peoples’ Bank and Mortgage institutions; Plays and performances conducted by educational institutions as part of learning and all exported services, are also included.

On sector-specific incentives, section 36 of Companies Income Tax Act(CITA) provides that a new company going into the mining of solid minerals shall be exempt from tax for the first three years of its operations. Also included in sector-specific incentives are interesting drawback programme fund for cassava processing which provides 60% repayment of interest paid by those who borrow from banks under Agricultural credit scheme for cassava production and processing.

On Tariff based incentives, there is 0%import duty on agriculture equipment and machinery ‎HS Headings 84,85 and 90; and 0% import duty rate greenhouse equipment has been classified as agricultural equipment HS Heading 94.06

The incentives further specified that part of general requirements to access tariff-based incentives include Evidence of registration with Corporate Affairs Commission; Tax compliance using Tax Identification Number and certification by the relevant ministry where applicable such as agriculture, automotive, greenhouse and power.

‎On export processing zone incentives, for enterprises approved by NEPZA under the NEPZA Act and operating within an approved zone, which include:100% foreign ownership of investment; Free transferability of capital, profits and dividends b foreign investors; Rent-free land at the construction stage, thereafter rent shall be payable.

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Also included in the export processing zone incentives are: All industrial undertakings including foreign companies and individuals operating in an Export Processing Zone are allowed full tax holiday from federal, states and local governments.

Yewande Sadiku, speaking on the benefits of the incentives said, “With the compendium of investments incentives in Nigeria, the investors have a useful document in one location. For the NIPC, this is a great step towards incentives reforms in Nigeria. The first step was to put together all incentives that are backed by legal instruments and showcase them to our investors.”

She also pointed out that the government would in no distance time have a review of the impact of the incentives that exist, adding that it would help to ascertain their overall impact so far on the Nigerian economy.

“It was as a part of a strategy to attract the right kind of investments into the economy that we are offering these incentives, but it is also closely monitored. We just reeled out of recession and had a growth rate of 0.55% and we must woo these investors into our economy with the right kind of incentives”

According to Yewande, “The Economic Recovery and Growth Plan, ERGP which Nigeria has as an instrument to grow the economy placed priority on private sector investment. If you look through the ERGP‎, it is a document that plans to attract 80% of investment through the private sector, and to enable us to achieve our vision”

‎Tunde Fowler, the Executive Chairman of Federal Inland Revenue Service noted that “The compendium covers all the areas that any man or businesswoman that is doing business wants to inquire about, which is in line with the federal government ease of doing the business drive. This is another step towards attracting the right kind of investment into the country in a coordinated approach”

“To address and forestall issues of abuse, am aware that the Minister of Finance has a team that supervises and monitors closely, of which the NIPC and FIRS is part of.

The document, it would be noted was published in under the provisions of Section 4(i) of the N‎Nigeria Investment Promotion Council, NIPC Act, which requires NIPC to “Provide and disseminate up-to-date information on incentives available to investors” in Nigeria.

HARRISON EDEH, ABUJA