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FG to Review 28 Tax Items

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  • FG to Review 28 Tax Items

The Federal Government is to carry out about 28 major reviews and amendment to the current tax laws and regulations to ensure a smooth take off of the National Tax Policy.

Details of the review are contained in the National Tax Policy document, which was approved by the Federal Executive Council last month.

An analysis of the document by our correspondent shows that 11 items are listed for review under “Appendix A” of the document; while 17 major amendments are expected to be carried out under “Appendix B” of the tax policy.

Those items listed for review under “Appendix A” are tax deductions based on the National Office for Technology Acquisition and Promotion; transfer pricing regulations; and pre-incorporation expenses.

Both transactions are currently being regulated under Section 27 of the Companies Income Tax Act.

Others are interest and penalties for tax default; capital allowance on some certain items; artificial transactions; ministerial and Federal Inland Revenue Service approval for tax deductions; clarity on withholding tax regulation; pioneer legislation; infra-group transaction; Stamp Duty Act and Franked Investment Income.

In justifying some of the items listed under “Appendix A” for amendment such as transfer pricing, the document said the review would align the issuance of foreign exchange, tax deduction with technology transfer.

It said, “As transfer pricing is tax legislation, the TP documentation should supersede NOTAP approval for the purposes of tax deduction.

“This policy should be harmonised between the ministries of Information and Technology, the Central Bank of Nigeria, and the Ministry of Finance.

“Aligning NOTAP with TP regulations to ensure NOTAP agreed to payments is always consistent with the TP basis for deduction to ensure NOTAP is more commercial in application.”

For incorporation tax, the document said the amendment would assist to provide clarity and allow a deduction for legitimate business expenditure.

It added, “There is no rule that specifically deals with such expenses. There should be a specific provision to allow a deduction for such expenses either via capital allowances or a revenue deduction.”

Under Appendix B, the document listed some of the areas for review as commencement, change of accounting and cessation rules; Excess Dividend Tax; minimum tax; taxation of insurance companies; Value Added Tax; intra-group transactions and stamp duty.

Others are Capital Gains Tax; withholding tax on dividend declared by companies engaged in gas utilisation projects; restriction of capital allowance claim; holding companies; and Real Estate Investment Trusts.

The document showed that despite the potential of taxation as a dynamic tool for sustainable national development, the Nigerian economy over the years had not derived the maximum benefits of its tax system in terms of revenue generation.

It added that the nation’s tax system had been plagued by numerous challenges such as lack of robust framework for the taxation of the informal sector and high network individuals, thus limiting the revenue base and creating inequity; fragmented database of taxpayers and weak structure for exchange of information by tax authorities, resulting in revenue leakage.

It listed other challenges facing the tax system as inordinate drive by all tiers of government to grow Internally Generated Revenue, which had led to the arbitrary exercise of regulatory powers for revenue purpose; and lack of clarity on taxation powers of each level of government and encroachment on the powers of one level of government by another.

In the same vein, it noted that the country’s tax system was affected by poor accountability of tax revenue; insufficient capacity, which had led to the delegation of powers of revenue officials to third parties, thereby creating complications in the tax system; and the use of aggressive and unorthodox methods for tax collection.

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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Computer Village Traders Demand Refunds as Lagos State Cancels Katangowa Project

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Traders at the renowned Computer Village in Lagos find themselves in a state of uncertainty following the abrupt termination of the multibillion-naira Katangowa project by the Lagos State Government.

The project, which was aimed at relocating the bustling tech market from its current site in Ikeja to the Agbado/Oke-Odo area of the state, has left traders in a state of limbo.

Despite the cancellation of the project reportedly occurring two years ago, traders claim they were not informed by either the government or the developers, Bridgeways Limited.

This lack of communication has left them in a precarious position, particularly concerning the substantial upfront payments made by some traders to the developers.

Chairman of the Computer Village Market Board, Chief Adebowale Soyebo, expressed dismay at the lack of communication from the authorities regarding the project’s termination.

He explained that neither the government nor the contractors had officially informed them of the decision, leaving traders in the dark about the fate of their investments.

Traders who had made payments to Bridgeways Limited now seek clarity on the refund process. The absence of official communication has compounded their concerns, with many uncertain about the fate of their investments.

While acknowledging the payments made by traders, Lagos State Governor’s Adviser on e-GIS and Urban Development, Dr. Olajide Babatunde, assured that the government would facilitate refunds.

He, however, said there is a need for proper identification and verification to ensure that affected traders receive their refunds accordingly.

The termination of the Katangowa project has reignited debates about the relocation of Computer Village.

Traders assert that the issue of relocation should not be raised until the new site is at least 70% completed, as per their agreement with the government.

The cancellation of the Katangowa project underscores the challenges associated with large-scale urban development projects and the importance of transparent communication between stakeholders to avoid such situations in the future.

As traders await further directives from the government, they remain hopeful for a resolution that safeguards their interests and ensures the continuity of one of Nigeria’s most prominent tech markets.

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Government Begins Disbursement of N200bn Support Fund to Manufacturers and Businesses

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The Ministry of Industry, Trade and Investment has initiated the disbursement of the long-awaited N200 billion Presidential Conditional Grant Scheme.

This is the beginning of a vital phase in the government’s strategy to provide financial assistance to manufacturers and businesses across Nigeria.

The scheme, which is being administered through the Bank of Industry (BOI), has been divided into three categories of funding, totaling N200 billion.

The disbursement process comes after an exhaustive selection process and verification of applicants to ensure transparency and accountability in the allocation of funds.

Doris Aniete, spokesperson for the Ministry of Industry, Trade and Investment, announced the progress in a statement posted on the trade minister’s official X (formerly Twitter) handle.

Aniete highlighted that verified beneficiaries have already started receiving their grants, signaling the beginning of the phased disbursement strategy.

“We are pleased to inform you that the disbursement process for the Presidential Conditional Grant Programme has officially commenced. Some beneficiaries have already received their grants, marking the beginning of our phased disbursement strategy,” stated Aniete.

She further disclosed that by Friday, April 19, a substantial number of verified applicants are set to receive significant disbursements.

However, Aniete emphasized that disbursements are ongoing, and not all applicants will receive their grants immediately, assuring that all verified applicants will eventually receive their grants in subsequent phases.

The initiation of the disbursement process comes after more than eight months since President Bola Tinubu announced the grant for manufacturers and small businesses.

The scheme aims to mitigate the adverse effects of recent economic reforms and foster sustainable economic growth by empowering businesses with financial support.

President Tinubu had outlined the government’s commitment to strengthening the manufacturing sector and creating job opportunities through the disbursement of N200 billion over a specified period.

The funding is intended to provide credit to 75 enterprises, each able to access up to N1 billion at a low-interest rate of 9% per annum.

However, the implementation of the programme has faced challenges, including delays and criticisms regarding the registration process.

Femi Egbesola, President of the Association of Small Business Owners, expressed concerns over the slow pace of data collation and suggested that genuine businesses were being discouraged from accessing the loans.

Despite the hurdles, the commencement of the disbursement process signifies a significant step forward in the government’s efforts to provide vital support to manufacturers and businesses, potentially revitalizing economic activities and driving growth across various sectors.

As beneficiaries begin to receive their grants, the impact of this initiative on the nation’s economic landscape is eagerly anticipated.

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MicroStrategy Rally Crushes Short Sellers, Wiping Out $1.92 Billion

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Short sellers betting against MicroStrategy found themselves facing significant losses as the company’s rally wiped out $1.92 billion since March.

This development comes amidst a rally that has seen MicroStrategy’s stock outperform bitcoin, causing a considerable hit to those who had taken a bearish stance on the tech firm.

According to data from S3 Partners, short sellers have been on the losing end since March, as MicroStrategy’s stock surged, highlighting the impact of the rally on those betting against the company’s success.

This loss underscores the challenges faced by short sellers in a market where certain stocks experience rapid and unexpected price increases.

The rally in MicroStrategy’s stock is attributed to several factors, including the approval of several spot bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) earlier in the year.

This move by the SEC brought bitcoin, a once-nascent asset class, closer to the mainstream and fueled investor interest in companies like MicroStrategy, known for their significant holdings of the cryptocurrency.

MicroStrategy, which held nearly 190,000 bitcoin on its balance sheet as of the end of 2023, has indicated its intention to continue increasing its exposure to the digital currency.

The company’s decision to sell convertible debt to raise money for additional bitcoin purchases further bolstered investor confidence and contributed to the stock’s rally.

Analysts at BTIG noted that the premium for MicroStrategy’s stock reflects investors’ desire to gain exposure to bitcoin indirectly, especially those who may not have the means to invest directly in the cryptocurrency or ETFs.

The company’s ability to raise capital for bitcoin purchases is seen as a positive sign for shareholders, adding to the optimism surrounding its stock.

However, despite the recent rally and optimism surrounding MicroStrategy, the crypto industry as a whole continues to be heavily shorted.

Short interest in nine of the most-watched companies in the crypto space remains high, standing at 16.73% of the total number of outstanding shares, more than three times the average in the United States.

Moreover, concerns persist regarding the SEC’s stance on cryptocurrencies, with some experts suggesting that the approval of spot bitcoin ETFs may not necessarily indicate a broader acceptance of other similar products, such as spot ethereum ETFs.

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