Vice President Yemi Osinbajo, on Friday said the plan of the current administration to slash taxes is to make Nigeria’s business environment attractive to investors.
Osunbajo said the administration offered a range of tax incentives to Nigerians through the Finance Bill recently passed into law.
The Vice President spoke on Friday at the third edition of the Nigeria Diaspora Investment Summit which was held virtually, featuring several Nigerians and prospective investors from the Diaspora.
The 3rd Nigerians in Diaspora Investment Summit (NDIS) has as theme “ Post-Covid Economic Resurgence: ROLE OF DIASPORA INVESTMENT”.
He said the 2020 Finance Bill just like the previous one aimed at attracting more incentives and make doing business in Nigeria more competitive.
Speaking specifically about how the Federal Government has been able to use the 2019 Finance Act to improve the business environment in the country, Prof. Osinbajo said “what we have done in furthering our own economic policy is to attempt to make the fiscal environment as attractive as possible. What we have done is to use the instrumentality of the Finance Acts to make or propose significant reforms.”
Prof. Osinbajo also emphasized that “the Finance Bill looks at several fiscal issues that we want to legislate on or amendments we want to make in the law, which would make it easier for us to implement the budget and also to ease the fiscal environment or make the fiscal environment friendlier. So, we started passing the Finance Act from last year and now we are proposing a second Finance Act this year.
“Last year, we passed a legislation giving small companies with a turnover of less than 25 million a year, tax exemption from the Companies Income Tax, while medium-sized companies with their turnover of between N25 million to a N100 million now pays Companies Income Tax at the lower rate of 20%. And then, services provided by Micro Finance Banks are completely exempted from VAT. So, no microfinance bank pays VAT now for its services. Withholding tax rates, also on roads, on bridges, on buildings, power plant construction contracts have been reduced from 5% to 2.5%.”
Explaining further, Prof. Osinbajo said “those who are doing construction contracts and proposing for construction contracts, pay a reduced rate, they no longer pay 5% they now pay 2.5%.
“Now in the proposed 2020 finance bill, we have gone a bit further, we are reducing by 50%, the minimum tax rate. So the minimum tax rate used to be 0.5%, now is reduced to 0.25% for gross turnover for the financial years ending between January 1st, 2020 and December 31st, 2021. So we have reduced the minimum tax rate by 50%, by half.”
On exemptions from education tax, the Vice President said, “we have exemption of small companies, with less than 25 million turnover from payment of the 2% educational tax under the tertiary Education Trust Fund. What we are saying now is that for companies that have a turnover off less than N25 million, they are no longer required to pay that 2% tax for the education tax fund so their tax burden is reduced.”
Speaking on efforts of the government in the area of software, he said “when companies acquire software for their company operations, in the past, that was treated as an overhead. Now we are going to treat it as a qualifying expenditure for tax deduction to improve the ease of doing business.”
He also explained government efforts towards job creation, saying “in response, we designed an ambitious N2.3 trillion Economic Sustainability Plan and the focus of that plan is on creating jobs, first by the Mass Agriculture programme where already we have enumerated 5 million farmers and geo-tagged them to their farm lands.
“Also, a Mass Housing programme where we are building 300,000 homes in all States of the Federation using local materials and using small to medium-sized construction companies and using direct labour.
“All of these locally produced. The whole idea is to generate jobs, generate opportunities and income in every locality that we are functioning in.”
In addition, the Vice President noted that “we also have a solar programme to make 5 million connections across the country. In other words, we are going to be putting 5 million Solar Home Systems across Nigeria that will service in all, about 25 million individuals.”
Commending the contributions of the Nigerian diaspora community in the development of the country, the Vice President noted that “our diaspora is one of our most vital resources, a literarily endless reservoir for talent, trade, investment, tourism, education, culture and sport opportunities.”
“But perhaps more important is the sheer range of well trained, honed and experienced talents that our diaspora represents. It is that potential not remittances that make our diaspora network an endless source of economic hope and social aspiration,” Prof. Osinbajo added.
Acknowledging the efforts of the CEO of the Nigerians in Diaspora Commission (NIDCOM) Hon. Abike Dabiri-Erewa, particularly in harnessing the resources and talents of Nigerians abroad, the Vice President said “the diaspora initiatives that we have, and all of your efforts are certainly appreciated and will result to a stronger economy for Nigeria and a better country.”
Dabiri-Erewa in her remark said “The Nigerians in Diaspora Commission is doing a lot to ensure that the Nigerians in Diaspora are experiencing the ease of doing business. The creation of State Diaspora Focal Point Officers and offices is to decentralize access of Diaspora and link them directly with their State and this I must tell you is yielding success as some states are providing lands for Diasporans to come and invest and own properties. Others are developing industrial estates and farms for agriculture waiting for Nigerians in the diaspora to key in for investment. This is a plus for NiDCOM. Presently, we have thirty one (31) State Diaspora Focal Point Officers representing different States. An adhoc Committee of fourteen (14) members was inaugurated in September with terms of Reference towards the establishment of a Nigerian Diaspora Investment Trust Fund (NDITF) to help facilitate the ease of doing business for the Nigerians in Diaspora this is in fulfillment of NiDCOM’s mandate to harness the Nigerians in the diaspora for national development.
“I will like to also inform you that the National Diaspora Policy is at the Federal Executive Council for final approval. This document will play an important role in actualization of the Mandate in the Act establishing the Commission.”
The Summit Coordinator Dr Badewa Adejugbe-Williams in her opening remark said, “the theme “Post Covid 19 Resurgence: Targeting Diaspora Investment” is apt, especially at this era when the Corona Virus Pandemic has affected both the human and material resources of all Nations. We need our Diaspora Community more than ever before because they possess the pertinent resources and are at the cutting edge of technology and development. There is no doubt therefore that our Nigerian Diaspora are an asset to their host countries and Nigeria in terms of their resources, skills and talents. The engagement of Nigerians in Diaspora in resurging the economy is more pertinent now as the post COVID-19 economy recovery plan requires global best practices for which the Diaspora are best suited.
“In addition to being recognized as the source of significant resource flows to countries of origin or heritage through remittances, the Nigeria Diaspora need to be seen and should also be encouraged to see themselves as significant social investors in the development of the country. This in turn creates potential opportunities for governments, financial institutions, and the private sector to harness and scale up these investments for economic growth. This 2-day Virtual Summit is therefore aimed at creating an avenue for prospective, meaningful and sustainable Diaspora Investment to be relied upon to boost economic growth in Nigeria and also about ensuring that the Nigerians at home and the Nigerians in the Diaspora works together closely to develop a great country.
“Specifically the Summit will be focusing on the following sectors: Healthcare; Education; Agribusiness; Creative, Entertainment & Sports; Telecommunication; ICT/Fintech; Manufacturing; Real Estate. This virtual summit will showcase the investment opportunities available in these sectors and the development framework put in place to make investing in Nigeria more attractive to Nigeria Diaspora investors.”
She was also of the believe that “sustenance of this yearly event will continue to encourage the Diaspora community in giving them a sense of belonging to contribute their quota in enhancing productivity of the national economy, and in the immediate long run contribute towards the needed sustainable development of the country.”