In the bid to cushion the effects of the COVID-19 pandemic ravaging the world with attendant impact on businesses and economies of nations, several fiscal measures have been put in place by relevant government agencies in Nigeria. Below, we give an overview of these measures and how you can maximize them for competitive and business support purposes this period.
Central Bank of Nigeria’s Regulatory Measures and Intervention Schemes
- Regulatory forbearance for the restructuring of tenor and terms of loan terms for business and households has been granted to all Deposit Money Banks by the Central Bank of Nigeria (“CBN”) via its Circular dated 16th March 2020[1]. As a result, requests can, therefore, be made in respect of existing obligations to your bankers for the restructuring of the terms as well as the span of the facilities.
- However, where such facility was availed under the CBN Intervention Fund Scheme, the CBN has ordered a 1-year extension of the existing moratorium on principal repayment with the 1-year extension effective from 1st March 2020 while interest rates on such facilities have been reduced from the rate of 9% to 5%.[2]
- Laudably, the CBN has also created a N 50 Billion Intervention Credit Facility for households and micro, small and medium-sized enterprises (MSMEs) with the primary object of stimulating credit to MSMEs to expand their productive capacity through equipment upgrade, research, and development[3]. Notably, households and enterprises with verifiable evidence of their livelihood or business as the case may be and enterprises with bankable plans to take advantage of opportunities presented by the pandemic are the eligible ones for the scheme. While the activities envisaged were left unexhaustive with income generation the paramount consideration, agricultural, hospitality, health, airline service, manufacturing, and trading activities were expressly mentioned as being under the coverage of the scheme. Small and medium-sized enterprises can access up to the sum of 25million Naira while households have a limit of 3 Million Naira with interest on the facilities pegged at 5% per annum till 28th February 2021 and 9% thereafter. It has been reported that the disbursement of this fund has commenced.[4]
Administrative Concessions and Reliefs granted by the Federal Inland Revenue Service and other Tax Authorities
- The Federal Inland Revenue Service (FIRS) has through different press releases, announced administrative concessions and reliefs availed to taxpayers during this pandemic and conditions for qualifications. Firstly, the FIRS announced concessions including extensions for Value Added Tax, Company Income Taxes and Withholding Tax returns, electronic submission of tax returns, 2-month deferment of submission of audited financial statements along with income tax return and advised continued use of its e-platforms for processing of tax clearance certificates and payment of taxes. For more on this, click here.
- Further, the FIRS has waived penalties and interests on outstanding tax liabilities arising from desk reviews, audits, and investigations where such tax arrears are settled in full on or before 31st May 2020. Another concession is the extension of time for filing of Personal Income Tax returns for non-residents, personnel of the Ministry of Foreign Affairs, the Armed Forces, and the Police till 30th June 2020. Where a taxpayer experiences difficulty in sourcing foreign exchange for settling a due tax, such payment can be made in its Naira equivalent based on the prevailing Investors & Exporters’ exchange rate at the due date of the payment. The FIRS has also undertaken to create an e-platform or dedicated electronic email addresses for submission of requested documents for review and audit purposes.
- In a similar vein, the Edo, the Lagos States, and Federal Capital Territory Internal Revenue Services have announced one, two, and three-months extension respectively to the filing of personal income tax returns from the original due date of 31st March 2020.
Waiver of Import Duties on Medical Supplies
- In the bid to strengthen the country’s health infrastructure, the Presidency has directed an implementation by the Nigerian Customs Service of blanket waiver of import duties on medical and pharmaceutical supplies, with effect from May 1, 2020.[5]
- Additionally, the CBN has made the sum of N100 Million available to pharmaceutical companies seeking to expand their manufacturing capacity in Nigeria in the bid to engender an increase in production to meet the apparent increase in the industry demand during this period while repayment holidays are being offered to several government intervention loans availed to farmers, petty traders and small businesses.
- Conclusively, other measures including a 500 Billion Naira Intervention Credit Scheme to fund identified intervention programmes and upgrade the healthcare facilities are being considered in consultation with the National Assembly as well as an amendment of the Appropriation Act for the year 2020.
Without a doubt, tax planning is a competitive tool that should be harnessed at a period like this. Business owners should explore and take advantage of all reliefs available under the different tax laws. Of interest at a time like this is the scope of non-vatable items in the light of a considerable shift in the list of items now considered to be essential. Presently, exempted items include basic food items, medical/pharmaceutical products, and services, baby products, books, and educational materials amongst others. With a considerable shift in the scope of what is basic and essential this period, reclassification of such products that are teetering to be VAT-exempt or zero-rated supplies could be achieved through judicial interpretation. Business owners should also endeavor to keep accurate financial records this period in anticipation of business judgment assessment which may be premised on deemed income adjudgments considering the pressure on the government revenue generation to meet the growing demands of public expenditure.
While several of the measures above are attractive and would be of help in cushioning the effect of the COVID-19 pandemic on individuals and businesses, it is imperative to seek professional guidance while accessing these reliefs with services ranging from risk analysis, drafting, review, and negotiation of terms, filings of tax returns as well representation in interface with regulators amongst others.
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[1] https://www.cbn.gov.ng/Out/2020/FPRD/CBN%20POLICY%20MEASURES%20IN%20RESPONSE%20TO%20COVID-19%20OUTBREAK%20AND%20SPILLOVERS.pdf Accessed on 3rd May 2020
[2] Ibid
[3] https://www.cbn.gov.ng/Out/2020/FPRD/N50%20Billion%20Combined.pdf Accessed on 3rd May 2020
[4] https://nairametrics.com/2020/05/02/cbn-starts-disbursement-of-n50-billion-covid-19-intervention-fund/ Accessed on 3rd May 2020
[5] https://thenigerialawyer.com/covid-19-buhari-waives-import-duty-for-medical-supplies/ Accessed on 5th May 2020
