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FG Grants Tax Holiday to 27 Industries

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tax relief
  • FG Grants Tax Holiday to 27 Industries

The Federal Executive Council on Wednesday approved the inclusion of 27 enterprises to the list of pioneer industries and products that would enjoy pioneer status under the Industrial Development Income Tax Relief Act.

The pioneer status incentive is a tax holiday given to companies for a period of time to encourage the growth and development of the Nigerian economy. A new company or an existing one with an expansion plan may apply for a certificate of pioneer status, which lasts for three years and is renewable upon application for two years.

It may also be a seven-year tax holiday in respect of industries located in economically disadvantaged local government areas of the country.

The Minister of Industry, Trade and Investment, Okechukwu Enelamah, disclosed this to State House correspondents at the end of a meeting of the council presided over by Acting President Yemi Osinbajo.

Enelamah said the council also resolved that that oil prospecting companies governed by the Petroleum Profit Tax should not be included in the pioneer industries’ list.

The minister, however, did not reveal the 27 industries added to the list.

He said firms covered by the pioneer industries’ list would enjoy tax holidays ranging from three to five years.

While recalling that the last review of the list was done in 2006, Enelamah stated that the latest review was done by paying special attention to the Economic Recovery and Growth Plan to capture the current realities.

He said the review would help the government to implement and realise the objectives of the ERGP.

The minister stated, “Against this backdrop, we then approved 27 industries that were recommended for addition to the pioneer list today.

“We also recommended and it was accepted by the council that mineral oil prospecting, which is governed by the Petroleum Profit Tax, should not be part of the pioneer industries’ list, which is meant for industries governed by the Companies Income Tax.”

The Minister of Power, Works and Housing, Babatunde Fashola, said the council approved two major road projects totalling over N20bn.

Fashola explained that the first project was the construction of the Pankshin-Ballang-Yelleng-Salla-Gindiri road in Plateau State for N10.461bn, while the second was the Share-Pategi road in Kwara State for N10.29bn.

The minister said the council also approved a memorandum with respect to an inherited liability from the old Ministry of Power, where a judgment of N119bn had been signed against the Federal Government as a result of the acts of its officials who varied a presidential approval without seeking further directive and then awarded a contract on that basis.

“The happy news is that council approved the memo to give effect to the negotiations that we were able to put together to compromise that judgement entirely and to convert the old N37bn now to a loan to that contractor so that they can use it to supply meters through the Discos,” he said.

The Minister of Science and Technology, Ogbonaya Onu, announced that the council approved a science policy to help to change the direction that nation would take.

One of the highlights of the policy, according to him, is that where there is bulk purchase of major items that will be brought into the country, those who normally would have supplied from outside the country will now come to Nigeria and establish their factories to produce locally.

By doing so, he said the firms would offer job opportunities to Nigerians and pay taxes to the government, among other benefits.

Onu stated, “We also agreed that from now on, any person who wants to practise any profession that has anything to do with science, engineering and technology like medical doctors, accountants, quantity surveyors, just to mention but a few, that first they have to be certified by appropriate regulatory bodies in Nigeria.

“This is very important in building our local capacity. There are so many areas that this new policy has covered, because the aim of this new policy is to make sure that in the next 10 years, Nigerian firms will be in a position to carry out very complex jobs; the sort of jobs that we don’t currently have the expertise to do in the country.”

The minister added that the council accepted to declare a state of emergency in science and technology.

According to him, this is important because the ERGP recognises the cardinal place of science and technology in driving the recovery of the economy and growth plan of the government.

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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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