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Nigeria Loses N571bn Annually to Tax Waivers – Report

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Internal revenue

About $2.9bn (N571bn) is being lost annually by the Federal Government to tax incentives given to some companies operating in the oil and gas sector under the Nigerian Liquefied Natural Gas consortium.

The figure was released by ActionAid Nigeria on Tuesday in Abuja during the launch of its report entitled: ‘Leaking revenue: How a big tax break to European gas companies has cost Nigeria billions’.

ActionAid Nigeria listed the companies to include Shell, Total and ENI, adding that the tax exemptions were for their investments in the NLNG Limited.

The NLNG is a joint venture between the Nigerian National Petroleum Corporation, Royal Dutch Shell, Total and Eni to exploit Nigeria’s huge reserves of gas.

It is the country’s major company in the liquefied gas sector and the three European companies hold 51 per cent stake in it, leaving the balance of 49 per cent to the NNPC.

The Country Director, ActionAid Nigeria, Ojobo Atuluku, said the amount being lost to tax incentives to the companies was capable of funding some key programmes in the country’s budget such as provision of health centres and schools, among others.

She said, “ActionAid researches from 2013 show that the tax incentives cost developing countries at least $138bn every year, part of which is an estimated amount of $2.9bn, or a whopping N577bn that Nigeria forfeits every year as a result of tax incentives.

“That amount is the equivalent of twice our national education budget and thrice the health care budget for 2015. This calls for serious concern in a country where over 20 million children do not go to school and almost 15 out of 100 children die before their fifth birthday.”

“There are incontrovertible evidence from researches conducted in many developing nations that corporate profits are soaring and corporate investments in low income countries had tripled since the 1980s. Yet, the corporate tax revenues of the countries where these profits are generated have flat-lined as a percentage of their Gross Domestic Product.”

She said there was a need for the Federal Government to review the tax incentives offered to companies operating in the country.

“ActionAid and their partners on the Tax Justice Platform want Nigeria and other resource rich developing countries to begin to review their tax incentive policies,” Atuluku added.

In his address, a member of the House of Representatives, Herman Hembe, said there was a need for the National Assembly to exercise caution in considering the proposed amendments to the Corporate Income Tax Act.

The amendment seeks to extend the granting of pioneer status to companies from five to 10 years.

This, according to him, may not be in the best interest of the country at a time when it was in need of more revenue owing to the decline in oil prices.

The NLNG, however, in a statement refuted the claims that the tax breaks were free, stressing that it was something that was obtainable in other countries.

It said, “The NLNG wishes to state that this claim is false and misleading. It is most instructive to note also that ActionAid itself admits in its report that its figure is a ‘hypothetical’ one.

“Contrary to ActionAid’s claim, the reality is that the Federal Government’s initial investment of $2.5bn, bolstered by the associated tax incentives, has so far yielded over $33bn in the form of dividends, taxes and feed gas purchases for the country over the past 16 years, with an additional $5bn accruing through corporate spend on local goods and services during the same period.

“The company paid $3.6bn in Company Income Tax and Education Tax between 2014 and 2015. This is in line with the NLNG’s corporate vision to help build a better Nigeria.”

It, however, admitted that it was granted a 10-year tax holiday, stressing that this was also obtainable in other countries.

The firm stated, “Considering the pioneering nature of such a company in Nigeria as well as the huge investments required, running to several billions of dollars in foreign investments, the NLNG was granted a 10-year tax holiday by the government of the Federal Republic of Nigeria under the provisions of the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act, CAP. N87, Laws of the Federation of Nigeria, 2004 (‘NLNG Act’).

“The concept of tax holidays is not an unusual practice in the global business community. Indeed, Angola has notably offered as much as 12 years’ tax holidays to encourage investments in their LNG industry, while other countries like Oman, Malaysia, Qatar and Trinidad have offered up to 10-year tax holiday to attract LNG investments.”

Punch

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Government

President Buhari Accuses Governors of Stealing LG Funds

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Muhammadu Buhari

Nigerian President, Muhammadu Buhari has once again accused state governors of stealing monthly allocation due to local government under them.

The president spoke at a parley with members of the Senior Executive Course of the National Institute for Policy and Strategic Studies, Kuru, held at the State House Banquet Hall, Abuja.

Speaking at the event, the president stated that it beats anyone’s imagination how some governors collected money on behalf of council areas in their states, only to remit just half of such allocation to the council chairmen, who would further deplete the remittance by filching it. Investors King learnt. 

 ‘‘I found it necessary to digress after reading my speech and this digression is a result of my personal experience. What they did, this is my personal experience, if the money from the Federation Account to the state is about N100m, N50m will be sent to the chairman, but he will sign that he received N100m. The governor will pocket the balance and share it with whoever he wants to share it with,” the president narrated. 

‘‘This is what’s happening. This is Nigeria. It’s a terrible thing; you cannot say the person who was doing this is not educated. He was a qualified lawyer, he was experienced, yet he participated in this type of corruption.” he queried. 

Furthermore, the president clarified that state governors and local government chairmen should be held responsible for the underdevelopment in the rural areas noting that most of the local governments lack basic amenities. 

Similarly, the National Union of Local Government Employees on Thursday backed the position of the president on the embezzlement and mismanagement of local government funds.

Responding to Buhari’s position, the  President of the Nigeria Union of Local Government Employees (NULGE), Hakeem Ambali, said Buhari was merely stating the obvious.

The NULGE President nevertheless admonished the president to go beyond the statement and ensure governors, especially those in APC to sign the local government autonomy bill into law.  

“He should go beyond that statement. He is the leader of the party, he should ask them to sign the autonomy into law; he is the leader of the governors,’’ he said.

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Ramaphosa Braces for Calls to Resign Over $580,000 Theft at Farm

The panel found the president may have violated sections of the constitution following a theft of $580,000 that was stashed in a sofa at a game farm he owns.

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Cyril Ramaphosa

South African President Cyril Ramaphosa’s allies are steeling themselves before a meeting of the governing party’s top leaders at which he’s likely to face calls for his resignation.

The African National Congress’s National Executive Committee will on Thursday discuss the findings by an advisory panel that there may be a case for Ramaphosa’s impeachment. The panel found the president may have violated sections of the constitution following a theft of $580,000 that was stashed in a sofa at a game farm he owns.

The release of the panel’s report on Wednesday night triggered a slump in the rand. The NEC meeting is scheduled to start at 7 p.m.

Party officials met with the ANC’s chief whip and the speaker of parliament to discuss the report on Wednesday, according to people familiar with the matter. A group of NEC members sympathetic to Ramaphosa held a meeting of their own, said the people who asked not to be identified discussing private party matters.

Pule Mabe, the ANC’s spokesman, didn’t immediately respond to a request for comment sent by text message.

Resignation Option

The meeting of Ramaphosa’s supporters was called by Minister in the Presidency Mondli Gungubele. Two NEC members who are close to Ramaphosa expressed concern that the president may opt to resign — a replay of what happened in June when the scandal over the game-farm theft first erupted and he took advice on whether or not he should quit.

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Ibom MRO to Bring in Forex to Nigeria 

Akwa Ibom State to open a cutting-edge smart terminal building at the Victor Attah International Airport

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U.S dollar - Investors King

The governor of Akwa Ibom State, Governor Udom Emmanuel, has announced that the state is close to opening a cutting-edge smart terminal building at the Victor Attah International Airport and that this will generate foreign exchange for Nigeria. 

Investors King has also learnt that an MRO facility for aircraft would be operational from January.

This comes on the heels of praise from his Edo State counterpart, Gov. Godwin Obaseki, who attended the Tuesday reception in Uyo for two additional A320-200 Airbus aircraft that the state’s Ibom Air fleet had leased from a European company.

Speaking at the event, the governor of Akwa Ibom said that while there were already efforts underway to persuade the government to lease the MRO, the MRO is an investment because it was built with naira, despite its current depreciation, and will therefore generate income.

The Akwa Ibom governor said “Our terminal building is world-class in Africa, our MRO is world-class. If you find one today in the entire Gulf of Guinea, tell me I’ll disassemble this one and build another.

“Look at our MRO; what you see here can accommodate two 747 aircraft as well as eight CRJ aircraft, which we are flying for servicing at the same time.”

“This is the only MRO in this part of the world today, and these facilities are not built with local currency, but we are building this MRO with naira that has no value.”

“I invest in areas where we can see a return on our money. Right now without blinking an eye, I can make over $ 30 million with this MRO if we decide to sell but we are not selling, we will make a foreign exchange from this investment.

“Airbus is on us to come and lease our MRO for all their regional flights, but we are not selling.

“We are going to open up this place ( MRO facility) from January next year for commercial activities and we are going to earn in dollars.”

He thanked Ibom Air’s Board of Directors, Management, and Staff for making him proud, emphasising that “they have done very well.”

Gov. Obaseki, who spoke at the event, stated that Akwa Ibom has become the country’s flagship state for its efforts to invest in and make significant strides in the aviation sector.

Obaseki described Akwa Ibom as the country’s flagship state for its efforts to invest in and expand the aviation sector. “Ibom Air is always completely booked.” Let me thank you on behalf of Nigerians,’’ Obaseki said.

In his remarks, the Managing Director of Ibom Airlines., Mr Mfon Udom announced plans to begin regional flights in 2023.

Udom said the new addition to the fleet of Ibom Air would expand its carrying capacity and boost employment opportunities in the state by 40 per cent.

“With this new capacity coming on board, we are delighted to inform our passengers that we have increased our offerings, providing more frequencies for their convenience.

“The Uyo-Lagos and Uyo-Abuja routes now have three frequencies each every weekday, while our Lagos-Abuja passengers will have seven frequencies to choose from both ways, every weekday,’’ he said.

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