SaharaReporters earlier reported also how companies shut down their operations in Nigeria, citing instances of poor economy and poor financial returns as reasons for these decisions.
Nigeria’s multi-trillion investment in tax waiver expenditures has failed to ignite the needed investments into the country.
Data review by SaharaReporters shows that different tax components including company income tax, value added tax, petroleum profit tax and custom duties waivers cost the country N26.7trillion between 2020 and 2024.
According to legal documents published by the Nigerian government, “Tax expenditures are a form of expenditures that have significant revenue implications, especially for an economy like Nigeria’s grappling with the challenges of domestic revenue mobilisation”.
Specifically, the Fiscal Responsibility Act (FRA) requires that all tax expenditures must be appraised for revenue impact before approval.”
These expenditures are usually expected to draw investments into the country.
Between 2020 and in the current 2024 fiscal year, Company Income Tax expenditure took N3.339 trillion, Value Added Tax stood at N17.6 trillion, Petroleum Profit Tax expenditures recorded was N1.872 trillion while customs duties stood at N3.941 trillion.
In total, the government did forgo and is willing to forgo a total sum of N26 trillion.
Nigeria’s tax revenue in 2023 stood at N12.3 trillion, in the same period, the government let go off the sum of N5.2 trillion as tax expenditures.
The government expenditures however seems not to be enough to draw investments into the country, going by the statistics on foreign direct investment into the country.
As of the first quarter of 2024, data released by the National Bureau of Statistics shows that thirty-one states failed to receive any capital.
The states are; Abia, Adamawa, Akwa Ibom, Anambra, Bauchi, Bayelsa, Benue, Borno, Cross River, Delta, Ebonyi, Edo, Enugu, Gombe, Imo, Jigawa, Kaduna, Kano, Katsina, Kebbi, Kogi, Kwara, Nasarawa, Osun, Ondo, Oyo, Plateau, Sokoto, Taraba, Yobe, Zamfara.
Data review shows that the federal capital territory received the sum of $593.58 million as capital importation while Lagos got $2.7 billion and Ekiti $1 million.
Capital importation data shows that in the 2023 fiscal year, only nine states received any form of capital importation out of Nigeria’s 36 states.
Lagos state led the pack with $2.5 billion capital importation followed by the federal capital territory, $1.1 billion.
Other states that received some form of capital importation are Ogun, Abia, Federal Capital Territory, Akwa-Ibom, Rivers, Ekiti, Adamawa and Anambra .
SaharaReporters earlier reported also how companies shut down their operations in Nigeria, citing instances of poor economy and poor financial returns as reasons for these decisions.
Nigeria has continued to suffer from dearth in investments, a situation that has exacerbated the unemployment level, hunger and other poor economic indices in the country.
Experts argue that beyond tax expenditures, there has to be a favourable environment for businesses to operate for meaningful impacts of the government waivers and revenue forgone in the country.
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