- FG Cautioned on Use of Corporate Tax Incentives to Achieve Projects Implementation
The Civil Society Legislative Advocacy Centre (CISLAC) has cautioned the Federal Government to avoid institutionalising a policy of granting long-term tax incentives to corporate businesses to achieve project implementation.
This, according to the civil society organisation is because of its tendency to create a distorted fiscal picture necessary for sustainable revenue and expenditure planning for infrastructural development. It is also susceptible to abuse and creation of complex tax administration frameworks that would result in long term revenue loss to the nation, it noted.
In a statement signed by the Executive Director of CISLAC, Auwal Ibrahim Musa (Rafsanjani), the organisation noted, “We are worried that the failure of government to deliver on its promise to Nigerians on infrastructure development, after over two years in office, due to the financial challenges because of dwindling revenues from oil, is driving her into panic mode and making her resort to desperate measures.
“These include falling back on discredited and obsolete approach of handing out tax incentives to show results, probably for electioneering campaign prelude to 2019. This must however not be done at the expense of long term national interest and development.
“CISLAC finds it disturbing that a country that is posting a debt to GDP Ratio of 16 per cent and a budget deficit of about 31 per cent of her annual budget in 2017, planning to borrow another $5 billion (about N1.9 trillion) to fund the 2017 budget, while already spending about 36 per cent of scarce revenues to service debts and is in danger of losing international funding to provide social services, still finds it convenient to concede revenues through the use of incentives. That this is done in exchange for road construction is quite embarrassing and an indictment on the government.
“We remind the government that in the era of falling prices of commodities, including oil, dipping national oil reserves and waning demand for fossil fuels, countries are seeking alternative sources of revenues through domestic resource mobilisation with emphasis of maximising tax revenues to finance development and meet SDG goals.
“They are blocking tax loopholes, addressing illicit financial flows, tackling tax evasion and avoidance, re-negotiating fiscal regimes in contracts and doing away with granting of tax incentives”, the release added.
“CISLAC understands that the arrangement reached with the Dangote Group to offer tax incentive in exchange for road construction falls within the purview of the CITA (Exemption of Profits Order 2012). However, the new National Tax Policy envisages that tax incentives are sector based and not directed at entities or persons that should provide a net benefit to the country, and equally available to all persons in the same class and be very clear and avoid ambiguity.
“We find no evidence that these principles have been followed in this case. The fact that the design and cost of the proposed road project is unknown, reveal the quality of thinking that went into this decision. We also find the review of the Order to extend from five years to ten curious.
“We are aware that this tendency for hasty and discretionary award of tax incentives is what makes it prone to abuse and corruption as has been with previous arrangements such as the Pioneer Status Incentives which this administration have had to cancel and review. For instance, have other cement companies been offered the opportunity to construct roads in exchange for tax incentives?
“CISLAC observes that the process leading up to this has lacked clarity and transparency as a cost-benefit analysis and report has not been publicly disclosed; there are no indications that similar corporate entities were offered equal opportunity. We find the very idea of offering firm tax incentives to build a road from which it directly benefits undesirable.
“We therefore call on the Minister of Finance to review this decision and ensure that this practice is stopped to avoid setting a dangerous trend that would hurt the nation in the long run. The actual revenue forgone should be computed and announced for all Nigerians to know by January 2018, as envisaged by the National Tax Policy.
“The process should be open to all potential beneficiaries in the sector, if it must proceed for fairness and equity. The FIRS should undertake a thorough audit at the appropriate time and publicly declare the implication to revenue to the Nigerian people”, the release noted.
The organisation called on the National Assembly Committees on Finance to interrogate this decision to ensure that it passes the tests of transparency and equity in the national interest, adding that the relevant committees must carry out effective oversight to ensure value for money, especially since any such incentive is meant to take effect only after the road project is completed.
“We call on the federal government to be mindful of the widening fiscal deficit, increasing national debt and wide infrastructural gap and bleak oil revenues and address these through better tax administration, tackling tax evasion and avoidance and illicit financial flows and ensure that all citizens and corporate businesses pay their fair share of tax.
“The government should adhere strictly to the implementation of the National Tax Policy and follow through her commitments in the OGP national Action Plan This is the only way for sustainable revenues to finance development for our people”, Rafsanjani added.
Volkswagen Group, Toyota, and Renault-Nissan-Mitsubishi Alliance Lost $104.5bn in Revenue in 2020
Automakers Lost $104.5 Billion in Combined Revenue in H1 2020
Automakers had a rough start to 2020, with global auto production, and sales slumped amid the coronavirus outbreak. Supply chain disruptions, factory closures, and sales drops had a massive impact on the largest automobile manufactures, causing a sharp fall in their revenues.
According to data presented by StockApps, the Volkswagen Group, Toyota, and Renault-Nissan-Mitsubishi Alliance, as the leading automobile manufacturers based on global sales, lost $104.5bn in combined revenue in the first half of 2020.
Volkswagen Group Revenue Plunged by $34.5bn, the Biggest Drop in 2020
The world’s largest automobile manufacturer, the Volkswagen Group sold the most cars in 2019, delivering 10.2 million sedans, sport-utility vehicles, and compact cars under its top passenger car brands, and almost 734,000 trucks in its three commercial vehicle brands. Statista data also revealed the German automaker hit a 25.4% market share based on new car registrations in Europe as of October.
Although the company managed to reduce the effects of COVID-19 in the first half of the year, the H1 2020 financial report still revealed severe losses. Between January and June, the Group’s sales revenue plunged by $34.5bn to $114bn, the heaviest fall among the top three automakers.
The COVID-19 outbreak caused a 27% drop in vehicle deliveries and an adjusted operating loss of $940 million in the first half of 2020, down from an $11.8bn adjusted operating profit in the year-earlier period, forcing the German automaker to slash its dividend. The Yahoo Finance data also revealed the Volkswagen Group market cap dropped by 17% in 2020, falling from $98.1bn in December 2019 to $80.8bn last week.
Toyota Motor Corporation, the world’s second-largest car producer, sold 10.74 million vehicles in 2019. With 7.9 million cars sold between January and June, 100,000 more than VW Group, the company could become the leading automaker in 2020 if COVID-19 is contained in its most important markets, Japan and the United States.
In fiscal 2020, ended on March 31st, 2020, the Toyota sales revenue dropped by $2.9bn or 1.1% to $290bn. However, the Q1 FY 2021 results, for the period between April and June 2020, revealed a 40.4% drop in revenue and the smallest quarterly profit in nine years as the coronavirus pandemic halved its car sales. Statistics show the revenue of the Japanese automaker plunged by $29.7bn YoY in the second quarter of 2020, with a total loss in the first half of 2020 reaching $32.7bn.
The auto giant expects coronavirus to deliver a major blow to earnings and sales in the fiscal year ending March 2021, with net profit forecast to plunge 64% year-over-year to $6.97bn.
Renault-Nissan-Mitsubishi Alliance Suffered a $37.3bn Loss
With 10 million vehicles sold in 2019 and 6.3 million in the first half of 2020, the Franco-Japanese Alliance, Renault-Nissan-Mitsubishi, ranked third on the list of the top-selling car manufacturers.
Nevertheless, the COVID-19 outbreak severely affected their business. The Renault Group suffered a massive downturn for the first half of 2020. Between January and June, the company reported $21.8bn in sales revenue, a $12.5bn or 34% plunge year-over-year.
Sales figures were also down for the period, with the Renault Group suffering a 34.9% plunge globally and 41.8% in Europe, the second-worst hit region after the Americas. Nissan’s sales dropped by 47.7% globally and 33.7% in its home market of Japan.
Mitsubishi Motors reported a $12.6bn revenue loss in the fiscal year ended March 31st, 2020. The downturn continued in the Q1 of the fiscal year 2021, with revenues falling to $25.5bn, a 32% plunge year-over-year. The Japanese multinational automotive manufacturer suffered a total loss of $24.8bn in the first half of 2020, while its market cap halved reaching $2.98 bn last week.
Statistics show the Franco-Japanese Alliance lost a total of $37.3bn in sales revenue in the first half of 2020.
Oil Steadies, But Outlook Gloomy as Coronavirus Cases, Supply Grow
Oil prices eked out small gains on Tuesday after sharp losses, but sentiment remained subdued as a surge in global coronavirus cases hit prospects for crude demand while supply is rising.
Brent crude was up 43 cents, or 1%, at $40.87 a barrel. U.S. oil gained 43 cents, or 1.1%, at $38.99 a barrel. Both contracts fell more than 3% on Monday.
A lack of progress on agreeing a U.S. coronavirus relief package added to market gloom, although U.S. House of Representatives Speaker Nancy Pelosi said on Monday she hoped a deal can be reached before the Nov. 3 elections.
A wave of coronavirus infections sweeping across the United States, Russia, France and many other countries has undermined the global economic outlook, with record numbers of new cases forcing some countries to impose fresh restrictions as winter looms.
“We think demand from this point onwards is really going to struggle to grow. COVID-19 restrictions are all part of that,” said Commonwealth Bank of Australia (CBA) commodities analyst Vivek Dhar.
CBA expects U.S. oil to average $38 and Brent to average $41 in the fourth quarter this year.
Prices got some support from a potential drop in U.S. production as oil companies began shutting offshore rigs with the approach of a hurricane in the Gulf of Mexico.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said on Monday the worst is over for the crude market.
But his comment contradicted an earlier remark from OPEC’s secretary general, who said any oil market recovery may take longer than hoped as coronavirus infections rise around the world.
Meanwhile, Libyan production is expected to reach 1 million barrels per day (bpd) in the coming weeks, the country’s national oil company said on Friday, a quicker return than many analysts had predicted.
That is likely to complicate efforts by the Organization of the Petroleum Exporting Countries (OPEC) to restrict output to offset weak demand.
OPEC+ – made up of OPEC and allies including Russia – is planning to increase production by 2 million bpd from the start of 2021 after record output cuts earlier this year.
An analyst survey by Reuters ahead of data from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday estimated that U.S. crude stocks rose in the week to Oct. 23, while gasoline and distillate inventories fell.
Nigel Farage Urged to Highlight Perils of DIY Investing
Nigel Farage appears to be advocating a DIY approach to investing – and this could be “monumentally risky” for inexperienced investors, warns the CEO of one of the world’s largest independent financial advisory and fintech organisations.
The warning from Nigel Green, chief executive and founder of deVere Group, comes as a daily finance-orientated newsletter from the team of the Brexit Party leader and political activist urges its readers to “tell us about your successes by going it alone – leaving the money men and middlemen by the side of the road…”
Mr Farage’s email is provided for correspondence.
Mr Green comments: “Successful DIY (Do It Yourself) investing can be possible, but for most people it is not recommended – indeed, it could be a costly and traumatic accident waiting to happen.
“Going it alone can be monumentally risky for inexperienced investors as the complexities involved can sink their portfolios.
“Perhaps this is why around two-thirds of wealthy individuals have a professional financial adviser of some sort, according to new independent research from the University of Toronto.”
He continues: “I would urge anyone who extols the virtues of a DIY approach to investing to also underscore the risks and potential pitfalls to be avoided.”
A pro will help you make the best investment decisions in five key ways, says Nigel Green.
“First, helping you to diversify a portfolio. Spreading money around is vital to curb risk. However, it must be used correctly – diversification will only add real value if the new asset has a different risk profile.
“Second, investing with a plan: Unless you have a sound plan, you’re gambling, not investing.
“Third, avoiding emotional decisions. Overly emotional decisions can prove deadly when it comes to investments because they are blighted by prejudices and biases.
“Fourth, regularly reviewing your portfolio: Investments need to be consistently reviewed to ensure they still deserve their place in the portfolio and that they are still on track to reach your long-term financial objectives.
“Fifth, not focusing excessively on historical returns: The future investment situation is likely to be different from time-aged averages.”
The deVere CEO concludes: “While investing remains almost universally regarded as one of the best ways to create, grow and safeguard wealth, considering the pitfalls of getting it wrong, it could be an expensive mistake for you and your family not to seek professional advice.”
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