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FIRS Explains Tax Waivers on Penalties

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  • FIRS Explains Tax Waivers on Penalties

The Federal Inland Revenue Service (FIRS) yesterday explained that its recent decision to grant tax waivers on penalty and interest was part of the federal government efforts to improve the ease of doing business among micro, small and medium scale enterprises (MSMEs) in the country.

The waiver to MSMEs on tax penalties and levies is from 2013 to 2016.

Speaking yesterday in Lagos at a public-private dialogue (PPD) which focused on: “Tax and regulatory policy framework for MSMSE in Nigeria,” organised by the National Association of Small and Medium Enterprises (NASME) with the support of Deloitte and Enable2, the Chairman of FIRS, Mr. Babatunde Fowler, noted that in terms of the waivers, MSMEs have to apply before the close of the window on December 31, while adding that another condition which the MSMEs have to fulfill was the payment of 25 percent of the outstanding taxes.

He stated that it was the desire of the federal government to give waivers on interests and penalties to MSMEs, stressing that the government was working to reduce the tax burden on the citizens. He expressed optimism that before the end of the year, the new tax law will become effective.

Fowler explained that due to the nature of business and the level of record keeping of MSMEs, his agency decided to give them extra time to present their records. The FIRS boss said his agency would also educate the MSME operators on all the charges, dues, levies or even penalties are not taxes.

He added: “Going forward we believe by next year everyone should be complying in terms of taxes, and the issues of tax holidays will not arise.

We have also deployed technology free of charge to all states of the federation, including the state government so that the tax portion can be remitted directly; even the state tax and the federal portion are remitted directly.

“Within the allowable structures, we will assist the states through programme capacity; we have to understand that there is a little federal and the state can do. They have their own constitutional independence; therefore there is a limit to how far we can go.

“The federal government does have the MSMEs as it number one priority because we believe that for any economy to work, you (MSMEs) have to work. Those who have assets in excess of 300 million are at the top scale. In terms of the waivers, the taxing authorities in Nigeria are distinct. We do have the prerogative to make policy on the federal taxes.

“The state’s internal revenue service boards are totally autonomous and they also have to make separate policies. This has slowed the duplication of taxes in Nigeria. What we have discovered is that there are now illegal charges collected by some officials who call themselves revenue operators at the local government level.”

In her remark, the Minister of Finance, Mrs. Kemi Adeosun, represented by the Director of Technical Service Department, Hajia Larai Shuaibu, noted that as part of measures to encourage businesses with a tax system that is easy to understand, the government constituted the National Tax Policy Review Committee (NTPRC) to review the National Tax Policy Document.

She stated that the exercise was setup with a view to addressing the modalities for simplifying the processes and reducing the tax burden on small businesses.

Adeosun called for the review of qualification for lower income tax rate applicable to small businesses in line with current economic realities, adding that the income tax rate for small businesses should be further reduced as an incentive to encourage compliance and promote MSMEs.

She noted that the review would be a continuous exercise, as a means of evolving global best practices and keeping with the domestic socio-economic realities. According to her, government has initiated the process of working towards having some recommendations of the committee as part of its 2017 fiscal Policy Measures.

The Minister added: “The Ministry of finance shall work with the legislature to ensure that the requisite changes to tax laws are enacted together with the Appropriation Act of the same year. This would require the executive to timely present the tax laws as executive bill for the timely consideration of the National and State Houses of Assemblies.”

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

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Nigerian Brewers Post Combined Loss of N169.7 Billion

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Nigerian Breweries - Investors King

Nigerian brewers collectively faced a significant setback in the first quarter of 2024.

According to a comprehensive analysis of financial statements from leading brewing companies, including Champion Breweries Plc, Nigerian Breweries Plc, International Breweries Plc, and Guinness Nigeria Plc, the industry reported a combined loss of N169.7 billion.

This downturn is in contrast to the same period last year when three of the four major brewers recorded a total loss of N54.3 billion, while Guinness Nigeria managed to eke out a modest profit of N1.84 billion.

Experts attribute this dramatic reversal to a multitude of factors, with the foremost being the steep devaluation of the Nigerian naira coupled with soaring interest rates.

The fluctuating exchange rates have exacerbated the financial woes of brewing companies, particularly those with significant dollar exposures.

International Breweries, for instance, saw its foreign exchange loss balloon to N162.2 billion in the first quarter of 2024 from an FX gain of N1.22 billion in the same period last year.

Similarly, Nigerian Breweries and Guinness Nigeria reported substantial FX losses of N72.85 billion and N37.06 billion, respectively, compared to much lower losses or gains in the previous year.

Even Champion Breweries, which did not record any FX loss in the comparative period, reported a loss of N0.74 billion in Q1 2024.

Industry analysts emphasize that the weakened naira has intensified the costs associated with servicing foreign debt obligations, further straining profit margins.

The shift to a floating exchange rate regime has led to rapid depreciation of the naira, resulting in significant FX losses across the brewing sector.

Moreover, the decline in consumer spending has added to the sector’s woes. Inflationary pressures have eroded the purchasing power and disposable income of consumers, forcing them to prioritize spending and seek cheaper alternatives.

Femi Egbesola, the national president of the Association of Small Business Owners of Nigeria, notes that inflation has significantly reduced consumers’ purchasing power, impacting their willingness to spend on alcoholic beverages.

Furthermore, increased competition from alternative beverages and a more diverse range of beer options have intensified market competition, squeezing profit margins for brewing companies.

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Appointments

United Bank for Africa Welcomes Emmanuel Nnorom to Board

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Emmanuel Nnorom

The United Bank for Africa Plc (UBA), Africa’s leading global bank, has announced the appointment of Emmanuel Nnorom as its new non-executive director, effective April 30, 2024.

This strategic appointment has received the approval of the Central Bank of Nigeria (CBN) as of May 13, 2024.

In an official statement, UBA highlighted the significance of Nnorom’s addition to the board. “Africa’s Global Bank, United Bank for Africa Plc (UBA), hereby announces the appointment of Emmanuel Nnorom as a non-executive director effective April 30, 2024.

The Central Bank of Nigeria (CBN) granted approval for this appointment on May 13, 2024.”

Tony Elumelu, Group Chairman at UBA, expressed his enthusiasm about the appointment.

“The appointment of Emmanuel Nnorom, a professional with considerable experience in the sector, emphasizes our Group’s commitment to strong governance and excellence. Nnorom brings a track record of working in critical sectors of the Nigerian economy, including power, and a pan-African perspective that complements our existing Board.”

With over 40 years of experience in financial services and audit, Nnorom’s extensive background includes significant board roles with listed companies.

He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an honorary member of the Chartered Institute of Bankers of Nigeria (CIBN).

Also, he is an alumnus of Templeton College, Oxford, further underscoring his vast expertise and qualifications.

UBA, which provides retail, commercial, and institutional banking services across several countries, including the United Kingdom, the United States of America, France, and the United Arab Emirates, continues to lead in financial inclusion and the implementation of cutting-edge technology.

This appointment comes at a time when UBA is celebrating record-breaking financial achievements. The bank recently reported over N2 trillion in revenue and a profit of N607.69 billion, the highest in its banking history.

Nnorom’s appointment is expected to bolster UBA’s board, bringing a wealth of knowledge and a fresh perspective to the bank’s operations. His experience in both financial services and critical sectors of the economy will be invaluable as UBA continues to expand its footprint and reinforce its commitment to excellence and strong governance.

As UBA continues to navigate the complexities of the global financial landscape, the addition of a seasoned professional like Emmanuel Nnorom signals the bank’s dedication to sustaining its growth trajectory and maintaining its position as a leading financial institution in Africa and beyond.

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Dangote Refinery Raises Diesel Price to N1,100/Litre Due to Naira-Dollar Crash

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Aliko Dangote - Investors King

Dangote Refinery has announced an increase in the price of Automotive Gas Oil (diesel) from N940 per litre to N1,100 per litre.

This significant adjustment in pricing reflects the refinery’s efforts to mitigate the impact of currency depreciation on its operations.

The decision to raise the price of diesel comes amidst ongoing challenges in the foreign exchange market, with the naira experiencing a downward spiral against the dollar in recent weeks.

The refinery cited the unfavorable exchange rate as the primary driver behind the price hike, signaling the intricacies of operating in a volatile economic environment.

It is worth noting that just a few weeks ago, on April 24, 2024, Dangote Refinery had announced a reduction in the prices of diesel and aviation fuel to N940 per litre and N980 per litre, respectively.

This move was aimed at responding to calls from oil marketers for a reduction in diesel prices, demonstrating the refinery’s willingness to adapt to market dynamics.

However, the recent depreciation of the naira has necessitated a reversal of this downward trend, prompting Dangote Refinery to adjust its pricing strategy accordingly.

Some dealers reported purchasing diesel from the plant at even higher rates, reaching up to N1,200 per litre for those procuring lesser volumes.

Abubakar Maigandi, the National President of the Independent Petroleum Marketers Association of Nigeria, attributed the price increase to the rising exchange rate, as communicated by the refinery.

He emphasized the direct correlation between currency fluctuations and the cost of imported commodities, such as crude oil, which forms the basis for diesel production.

While officials of the refinery have remained tight-lipped on the matter, industry sources and major marketers have corroborated reports of the price adjustment.

Chief Ukadike Chinedu, the National Public Relations Officer of IPMAN, echoed similar sentiments, highlighting the adverse impact of the naira’s depreciation on refined product prices.

The recent fluctuations in the naira-dollar exchange rate underscore the challenges facing Nigeria’s economy, with implications for various sectors, including energy and transportation.

Despite initial signs of stability earlier in the year, the naira’s recent depreciation has reignited concerns about inflationary pressures and economic uncertainty.

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