Nigeria to Reevaluate Tax Breaks Awarded to Companies

The Nigerian federal government has announced its intention to reassess the tax incentives provided to businesses operating within the country. Taiwo Oyedele, the chairman of the presidential tax reform committee, disclosed that these incentives amount to N6 trillion annually.

During a recent press briefing, Oyedele explained that the committee’s primary objective is to conduct a comprehensive review of tax waivers. He emphasized that while incentives are not inherently negative, it is crucial to periodically evaluate them due to changing circumstances.

Oyedele further elaborated, “Without periodic examination of our incentive system, it can eventually lead to economic imbalances. Some entities benefit while others in the same sector cannot compete, causing distortions. We must also consider the cost-benefit aspect. If we’re giving away N1, we need to ensure the resulting benefits outweigh this cost.”

He added that their mandate from the President includes crafting targeted, data-driven, and evidence-based incentives, often with time limits, to replace the existing system. The ultimate goal is to stimulate the economy, remove disincentives in the tax structure, and foster inclusive growth and wealth creation.

Back in 2019, former President Muhammadu Buhari introduced Executive Order 007, which initiated the Road Infrastructure Development and Refurbishment Investment Tax Credit (RITC) scheme. This scheme provides income tax credits to companies and individuals who finance road refurbishment and rehabilitation projects.