Nigeria loses N8 trillion to tax incentives and waivers —

The immediate past Chairman of the House of Representatives Committee on Public Accounts, Oluwole Oke, has alleged that Nigeria was losing about N8 trillion annually to tax incentives and waivers. Oke said about N6 trillion of the money is lost annually to companies that abuse the system, while N2Trillion worth of waivers achieve the objective of the Federal Government.

He said most of the abuses arise from fiscal items like capital allowances, Investment Allowances, Pioneer Status Incentives, Free Trade Zone exemptions, Value Added Tax Exemptions, etc. He said these gaps have negatively affected Nigeria Tax to-GDP ratio of Nigeria, which stands at 10.6%, being one of the lowest in Africa.

Oke admitted that it is within the ambits of the powers of the Federal Government to exercise executive and legislative jurisdiction over items in the Exclusive Legislative List contained in the Second Schedule to the Constitution of the Federal Republic of Nigeria, 1999. He said items like taxation of incomes, profits and capital gains, export and imports are exclusively within the control of the Federal Government.

He said available data shows that while the Federal Government has good intentions, these practices have and continue to create a major black hold in the purse of the Government of the Federation. These losses, he said are occasioned and driven primarily by abuses by Companies that have been granted tax-based waivers and incentives.

He said if urgent steps are not taken to investigate the situations, Nigeria may not only be hanging on a fiscal cliff, it may fall off the cliff and be heading to Venezuela, which is a situation where a country has huge resources but is in deep economic crisis, recession and depression. The House therefore resolved to investigate allegations of fragrant abuse of tax incentives, tax breaks and tax waivers by institutions and companies benefiting from such incentives in the country.