Nigeria’s Finance Act 2020 enjoys 92 per cent public support, PricewaterhouseCoopers (PwC Nigeria) has stated.
In a new survey released yesterday, PwC stated that on the survey on changes to laws from the Finance Act, the majority of respondents were most excited about the reduction of minimum tax from 0.5 per cent to 0.25 per cent of turnover.
The survey was the outcome of PwC’s virtual “Executive Roundtable on the Finance Act 2020 and Economic Outlook for 2021” held on Monday.
The event was targeted at chief executive officers, C-Suite executives and Micro, Small and Medium Enterprises (MSMEs) and focused on the impact of changes to existing laws by the Finance Act 2020 and other significant government policies to businesses and taxpayers in Nigeria.
The survey said on the changes to laws from the Finance Act, the majority of respondents were most excited about the reduction of minimum tax from 0.5 per cent to 0.25 per cent of turnover.
Country Senior Partner PwC Nigeria, Uyi Akpata, noted that considering the impact the COVID-19 pandemic on the economy, it was important for businesses to understand the forces shaping the economy in the year.
He said such knowledge will help them minimise potential risks and take advantage of the fiscal policies the government had enacted to stimulate the recovery of the Nigerian economy.
In her keynote address, the Minister of Finance, Budget & National Planning, Mrs. Zainab Shamsuna Ahmed, emphasised the administration’s commitment to enabling economic recovery and stimulating inclusive growth through policies and interventions designed to foster economic resilience and business sustainability.
She said the Finance Act 2020 was aimed at supporting vulnerable households and businesses while improving fiscal discipline and procurement efficiency, enhancing economic competitiveness, encouraging domestic investors and enhancing macro-economic stability amid the challenges posed by the pandemic.
Also, Partner and Chief Economist, PwC Nigeria, Dr. Andrew S. Nevin, noted the 10 themes that policymakers and businesses needed to consider in the year.
He said Nigeria must find its development path, and that achieving this will include finding innovative ways to act on unlocking Nigeria’s vast dead assets to stimulate growth, harnessing the power of the Diaspora, and driving export growth through services.
He listed others to include the need for growth to be spread across the country, and not just in a few urban centres; improving on the country’s low investment and gross capital formation; moving its thriving informal sector to the formal sector; improving on the business environment, and ease of doing business.
Others were the need to addressing Nigeria’s big three distortions (exchange rate, power, and subsidies); shifting its focus from the Gross Domestic Product (GDP) lens to Sustainable Development Goals (SDGs), and prioritising climate change.
Nigeria holds as much as $900 billion worth of dead capital in residential real estate and agricultural land. The value of the Federal Government’s abandoned properties alone, according to the Nigerian Institute of Builders, is projected to be about N230 billion.
Also, about half of Nigeria’s population lives in cities, of which almost 80 per cent of them are living in substandard conditions. Finding the political will to act and unlock Nigeria’s dead real estate assets will have a transformative impact on the lives of Nigerians.
Of the 10 themes, another important theme to consider was Nigeria’s Gross Fixed Capital Formation, which in 2019, stood at less than 20 per cent. And PwC estimates that Nigeria would need an investment rate of at least 26 per cent – 28 per cent of GDP to achieve seven per cent growth.
Nigeria’s economy, Nevin further noted, is distorted by the exchange rate; fuel subsidy regime; and the power sector. He said addressing these three big distortions will be taking the giant step to restructure the country’s economy holistically; achieve the seven per cent GDP growth, and improve the lives of the average Nigerian.
Fiscal Policy Partner and West Africa Tax Leader PwC Nigeria, TaiwoOyedele, who shared insights on how the Finance Act 2020, and other significant changes that have been made to existing laws, will shape Nigeria’s tax environment in 2021, noted that there were no easy choices or a silver bullet given the limited fiscal space for incentives and to deliver on counter-cyclical measures.
He commended the policy direction of the government not to introduce new taxes or increase the rate of existing taxes. While commending the government for the reduction in minimum tax rate, he advocated for a permanent removal of the tax which often tax companies that are vulnerable especially when they are loss making.
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