‘Nigeria loses N577b yearly as tax incentives to firms’
A new report by Actionaid and Tax Justice Network Africa has shown that Nigeria is losing about $2.9 billion (N577.2 billion) revenue yearly to corporate organizations as tax incentives with a view to attracting foreign investments into her economy.
The report which focused on Nigeria, Ghana, Cote d’ Ivoire and Senegal reveals that granting tax incentives to investors, notably foreign companies, is depriving governments of money to pay for essential public services like health, education and infrastructure.
According to the report which was presented to newsmen yesterday in Abuja, ‘’Corporate tax incentives which are reductions in tax offered by governments to attract investment include reduced corporate income tax rates and tax holidays for specified periods, often provided to companies operating in special economic zones. Despite serious questions about their usefulness and their large revenue losses, the use of tax incentives has become common practice.’’
The report states that tax incentives are given to companies in the hope that foreign investors will bring in capital to support economic development and create local employment, however, there is little evidence that tax incentives have increased investments, rather, the increased investment could be attributed to the presence of natural resources, especially oil.
‘’Neither have significant numbers of jobs been created by the foreign investments, despite generous tax incentives given by the government since most of them have not been in sectors like manufacturing that create the most jobs’’.
The report recommends that the Nigerian government and all other governments in ECOWAS need to comprehensively review the incentives they are granting with a view to reducing them, abolishing unproductive incentives and ensuring that those remaining are targeted at achieving specific social and economic objectives.
It similarly calls on the government and the ECOWAS members to bring their incentive regimes under the control of a single entity with effective and resourced oversight mechanisms to ensure accountability and transparency of public spending.
Addressing journalists on behalf of the coalition in Abuja, the Deputy-Country Director, ActionAid Nigeria, Ifeoma Charles-Monwuba said: ‘’The study has shown that annually, Nigeria forfeits as much as N577 billion as a result of tax break granted companies. This amount could go towards addressing infrastructural deficit in Nigeria’’.
No Comments yet