REPS TO INVESTIGATE N8TRN REVENUE LOSS FROM TAX INCENTIVES, WAIVERS
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The House of Representatives has initiated an investigation into the alleged misuse of tax incentives, waivers, and exemptions, which has reportedly resulted in an estimated N8trn loss in revenue for the Federal Government.
This move came after the adoption of a motion of urgent public importance introduced by Oluwole Oke, a member representing the Oriade/Obokun Federal Constituency of Osun State, during Thursday’s plenary.
While the House initially adopted the motion on July 14, 2023, Oke’s renewed call suggests that little progress has been made on the issue.
In his remarks, Oke emphasized that the taxation of incomes, profits, capital gains, exports, and imports is solely under the control of the Federal Government, with fiscal policies aimed at stabilizing the nation’s economic conditions.
He said, “Some of the tools available to monetary and fiscal policy authorities to stimulate economic activities in certain sectors include tax waivers, tax breaks, tax exemptions, and tax incentives. The government grants these incentives to attract investments into specific industries.”
He recalled that successive administrations had issued fiscal policy measures and tax modification orders in line with national economic strategies, with some interventions yielding positive results.
However, the lawmaker lamented that despite the government’s good intentions, tax incentives and waivers had created a “major black hole in the country’s finances,” mainly due to abuses by companies benefiting from the scheme.
According to available data, Oke disclosed that Nigeria loses approximately N8 trillion each year due to tax waivers. Of this amount, N6 trillion is lost to companies that take advantage of the system, while N2 trillion is attributed to poorly managed waivers.
He pointed out several fiscal areas vulnerable to misuse, such as capital allowances, investment allowances, pioneer status incentives, free trade zone exemptions, and VAT exemptions.
“These loopholes have significantly impacted Nigeria’s tax-to-GDP ratio, which currently stands at 10.6%—one of the lowest in Africa,” he added.
Oke warned that if urgent steps were not taken to curb the abuse of tax waivers, Nigeria could face a severe fiscal crisis.
He stated, “If this situation persists, Nigeria may not only be on the verge of a fiscal collapse but could suffer a fate similar to Venezuela—where a country with vast resources finds itself in deep economic turmoil, recession, and depression.”
After discussions, the House directed its Committees on Industry, Finance, and Commerce to investigate the matter and present a report within four weeks for further legislative consideration.
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