States Offer Tax Relief to Individuals, Businesses

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  • To get $2.5m incentive for beating deadline on new initiative

Chuks Okocha in Abuja

The 36 states of the federation have unveiled plans to introduce tax relief programmes to mitigate the impact of the COVID-19 pandemic on businesses and individual taxpayers as well as to ensure the speedy recovery of their respective economies.

In return, the states would be rewarded by the World Bank with $2.5 million each in performance-based grants if they announce by July 31 and implement by September 30, a tax- compliance relief programme for taxpayers and businesses.

According to a statement from the Nigeria Governors’ Forum (NGF) at the weekend, the relief programmes, which were initiated in states across the board, have focused on five main tax activities.

These include an extension of filing and payment dates, tax moratoriums, waivers or reduction of penalties and interests over the extension period.

The initiative, the governors said, formed part of the outcomes of a virtual meeting held recently, under the States’ Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for Results, jointly organised by World Bank and NGF.

The programme was driven by the Federal Ministry of Finance, Budget and National Planning (FMFBNP).
The governors added that while some states are also offering rebates or discounts on taxes paid within a specific period, others are allowing the payment of taxes, fees and levies, among others in installments.

It noted that states’ tax offices are now enabling filing and the issuance of tax clearance certificates electronically (online).

“The SFTAS experts at the webinar concluded that such waivers for businesses are no longer optional, but have become an essential element of governments’ stimulus-targeted packages to facilitate recovery for businesses who face a liquidity crisis and individuals whose livelihoods have been adversely impacted by the COVID-19 crisis.

“State governments are themselves currently experiencing a liquidity crisis of their own; and with limited capacity to borrow, it has become imperative that they find a balance between granting tax reliefs and maintaining revenues at a sustainable level.

“The extent to which government revenues will be impacted by these reliefs will depend on the type of relief that they grant and their ability to raise their tax efforts simultaneously, including offering incentives for greater tax compliance,” it stated.

According to the statement, the efforts are being incentivised by a new Disbursement Linked Indicator (DLI) under the Federal Ministry of Finance Budget and National Planning and World Bank $750 million States Fiscal Transparency, Accountability and Sustainability (SFTAS) programme for results.

Eligible states will be rewarded with $2.5 million each in performance-based grants if they announce by 31st July 2020 and implement by 30th September, 2020, a tax compliance relief programme for individual taxpayers and businesses to mitigate the COVID-19 impact.

“However, there are criteria to be met if a state is to receive the $2.5 million. These are that state announcements should be signed by the commissioner of finance or the executive chairman of the state internal revenue service and published on state websites and in national dailies to ensure widespread awareness amongst taxpayers,” it added.

The state government should also “issue to their tax officials and collecting agents, guidelines for the implementation of the reliefs to ensure consistent execution by all and sundry.”

The virtual meeting was attended by 125 participants from the 36 states of the federation, including state commissioners of finance and executive chairpersons of state internal revenue services.

Addressing the participants, the Programme Manager, NGF SFTAS Technical Assistance Project, Mr. Olanrewaju Ajogbasile, stated that the secretariat, through the support of FMFBNP and World Bank, was available to provide technical advisory on the domestication of reforms to meet DLIs and more broadly, fiscal sustainability.

Ajogbasile also said while some states had followed strictly the requirements of granting extension for filing 2019 annual returns and waiver for penalties and interests for businesses and individual taxpayers, others had waived other taxes, fees and levies for a specified period of time.