The Centre for Promotion of Private Enterprises (CPPE) has commended the Presidential Committee on Fiscal Policy and Tax Reforms on its fiscal relief proposals for businesses in the country, including the recommendation on the Nigeria Customs’ foreign exchange (FX) regime on imports, describing the proposals as desirable for the current drive by all stakeholders to boost the nation’s economic growth.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr, Taiwo Oyedele, had on Thursday during a Public Consultation Workshop on the proposed changes to the National Tax Policy held in Lagos hinted that the committee proposed the exemption of manufacturers and farmers from paying Withholding Tax (WHT) as part of its recommendations to reduce tax burden on businesses in the country.
He explained: “We set out the objectives of what we want to do with withholding tax regulation. One of them is to simplify the tax, We want to reduce the burden on businesses, promote competitiveness, equity and ease of compliance and tax avoidance, detect tax evasion and reflect what is happening globally,
“We are creating an exemption for withholding tax for small businesses and what we have in mind is N50 million. We have reduced the rate for real businesses to as low as 2% – people producing goods and services because the margins are very small/
“We have created an exemption for manufacturers, So, if you are a manufacturer, don’t worry about withholding tax, If you provide input to manufacturers like farmers, don’t worry about withholding tax”, Oyedele added.
According to him, the proposal had already been signed by the President and will be made public within the next few days.
Oyedele further pointed out that for businesses not registered with the Corporate Affairs Commission (CAC), tax agencies would deduct 200% of the normal tax rate for them as sanction for non-registration in order to compel them to formally register their businesses.
On the frequent changes of Customs duties exchange rate on imports, which had been a major complaint of manufacturers and other import-dependent business owners in the country, the committee chairman said the committee had proposed the pegging of the Customs duties exchange rate at N900/$1 as approved in the 2024 budget.
Reacting to the committee’s proposals during a chat with BRTNews.ng, the CEO of the CPPE, Dr. Muda Yusuf, said the recommendations given their potential positive impacts on businesses in the were welcomed and expressed the hope that the Federal Government would accept the proposals for implementation,
Yusuf, who has been a strong advocate for the moderation of the harsh fiscal policies of the successive governments over the past years, maintained that the implementation of the proposals would bring certainty to international trade, reduce investment risks, and moderate the surging inflation amongst other fiscal gains.
Specifically, on the committee’s Customs duties exchange rate proposal, the CPPE boss elaborated: “The is a very good recommendation. It is my hope and prayer that the recommendation will be accepted. It shall bring predictability and certainty to international trade and reduce investment risk. It will also have a moderating effect on inflation by reducing the costs of imports.
“The current methodology of using the official exchange rate for customs duty computation had created serious dislocations to international trade and inflicted losses on many businesses. It has exacerbated inflationary pressures, caused trade diversion to neighbouring countries, resulted in loss of jobs in the maritime sector, worsened uncertainty, made planning difficult for businesses, escalated trade costs and undermined investors’ confidence.
“Let me emphasize that this recommendation does not conflict with the current foriegn exchange reforms. It does not detract from the policy of rate convergence in the foreign exchange market. This is not about selling forex at preferential rate to anybody or business. This is limited only to trade. It is only about applicable rate for computation of customs duty. And it will be non-discriminatory. It will be uniform for all importers.
“I will also plead that the rate should subsist for between three to six months. The business community will appreciate the acceptance of this recommendation”, the seasoned economist added
