Nigeria introduces tax and economic measures in response to COVID-19 pandemic
Nigeria introduces tax and economic measures...
The outbreak of Coronavirus disease (COVID-19) and its rapid spread across the world has introduced a new wave of disruption never seen before.
The health systems have been stretched to the limits and the economic impacts are taking their toll on government revenues, businesses, families and individuals across the world. This has prompted various governments across the world to introduce fiscal and economic stimulatory measures to ameliorate the impact of the pandemic on taxpayers and save their economies from collapse.
Below is a summary of the tax and economic measures announced by the Federal Inland Revenue Service (FIRS), Central Bank of Nigeria (CBN) and proposals by the House of Representatives (HORs) in the Emergency Economic Stimulus Bill, 2020 (“the Bill).
Tax measures by the FIRS
On Monday, 23 March 2020, the FIRS announced health and safety protocols for physical visits to its offices and the following measures to mitigate the impact of COVID-19 on taxpayers:
- Extension of timeline for filing of value added tax and withholding tax from the 21st day to the last working day of the month, following the month of deduction
- Extension of the due date for filing of companies’ income tax (CIT) returns by one month
- Use of electronic platforms for payment of taxes and processing of tax clearance certificates
- Filing of tax returns by taxpayers without audited financial statements which must be submitted within two months of the revised due date of filing
- Proposed creation of a portal where documents required for desk reviews and tax audits will be uploaded by taxpayers for online access by the tax authority
- Submission of tax returns online by taxpayers via efiling.firs.gov.ng or by designated e-mail accounts published by the FIRS.
Economic measures by the CBN
The CBN announced policy measures worth N3.5 trillion, that include:
- Additional moratorium of 1 year on CBN intervention facilities
- Interest rate reduction on intervention facilities from 9% to 5%
- Creation of N50 billion target credit facility for affected households and small and medium enterprises
- Granting regulatory forbearance to banks to restructure terms of facilities in affected sectors
- Improving FX supply to the CBN by directing oil companies and oil servicing companies to sell FX to the CBN rather than the Nigerian National Petroleum Corporation
- Additional N100 billion intervention fund in healthcare loans to pharmaceutical companies and healthcare practitioners intending to expand/build capacity
- Identification of few key local pharmaceutical companies that will be granted funding facilities to support the procurement of raw materials and equipment required to boost local drug production
- N1 trillion in loans to boost local manufacturing and production across critical sectors.
Additionally, the CBN has taken steps towards adoption of a uniform US Dollar to Naira exchange rate by increasing its intervention rate at the Investors and Exporters’ (I&E) Window of the FX market from N366 to N380 to the dollar and prescribing a similar rate at the end users’ retail market. While increasing the official rate from N306 to N360 per dollar has narrowed the gap between the official rate, the end user rate, and I&E Window intervention rate, it has only effectively replaced the multiple exchange rate regime with a dual exchange rate regime. It is hoped that sooner than later, the CBN will move from the new dual exchange rate to a market-driven uniform exchange rate regime for full transparency in the operation of the FX market and accounting for public revenue and expenditure.
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