The Nigerian Government is planning to impose a 0.005% tax on companies operating businesses in Nigeria. The tax, although they call it levy, stems from The Nigerian Police Trust Fund Act, that was passed in April, and signed into law in July.

The Act establishes fund: proceeds from which training of police personnel will be facilitated and also the procurement of security machinery and equipment.

According to PWC: The Act imposes a levy of 0.005% of the “net profit” of companies operating business in Nigeria. The fund will also consist of 0.5% total revenue accruing to the federation account, in addition to proceeds from grants, intervention funds, aids, donations, investment income, etc.

A board will be established to administer the fund and make other administrative decisions to fulfill the objects of the Act.

It is designed to last for 6 years only, after which the assets and liabilities will be transferred to the Nigerian Police.

While security and the need to improve the welfare of the Nigerian Police cannot be excused, there have been a lot of concerns about the Act.

In the wake of time where the Government increased VAT from 5% to 7.2%, people are worried that multiple taxation is becoming another heavy burden on businesses struggling to cope with so many infrastructural deficiencies.

And most of all, foreign companies operating businesses in Nigeria. Although the 0.005% (N5 per N100, 000) seems so insignificant, it places additional administration on corporate taxpayers. A situation PWC says it could create concerns around the stability of the tax regime in Nigeria.

According to the report: The Act specifies that the Fund’s income is tax exempt, but does not make provision for tax deductibility for the companies making payments. Also, although the Act refers to the contribution as levy, it should be classified as an income tax under IAS 12, as it is imposed on income/profits.

It is therefore not tax deductible based on CITA which specifically disallows taxes on income or profits of companies. One other issue that caught the eye is that the Net Profit for computing the levy is not defined in the Act. Therefore, companies should be able to interpret it the other way, which is, profits after tax, but before the levy.

One other notable issue is that the Act does not contain provisions on collection and administration of the levy. That means, a further regulation would therefore be needed if FIRS will be responsible for the administration, since any other approach will result in high cost of administration.

Also the Act provides for audit and presentation of an annual report to the president only. When the tax is coming from publicly and privately owned businesses who would want accountability, to ensure that their taxpayer’s money has been judiciously utilized.

However, there is hope that may be a new regulation that will address these concerns.

NYSC post corpers to churches and mosques.

I spoke with a corp member that just left the camp on Monday, 9th of September. He told me how he was posted to a church.

I’m not against corp members being posted to religious organizations since some churches and mosques have offices. But it seems to be the opposite for the newly posted corp member, Adekunle who is serving in Ondo state.

Adekunle reached out to me to share his disappointment. He told me, ”These people are jokers. You won’t believe what happened when I got to where I was posted for my Primary Place of Assignment (PPA). I was posted to a church.”

According to Adekunle, he said he wasn’t upset about being posted to a church, after all, some churches have schools and other organizations. But Adekunle was upset with his role in the church.

He said, ”The pastor of the church told me that I would be working with him in the parish. I will be cleaning and arranging chairs whenever they have a program. To crown it all, I will be present during vigils.”

The National Youth Service Corps officials, this is unacceptable. These corpers are graduates. They’ve spent at least four years in the university. They have applied to serve their fatherland. Would it not be better if they are posted to places where they can learn?

No parents would be happy to see their children being assigned to such a role. Would you post your children to such places?

After all, NYSC is meant to prepare them for the work environment. Cleaning and arranging of chairs would be the worst thing anyone can do for a year. It’s time we start valuing our graduates. Because there are no jobs in the country is not enough reason to post anyone to such places. It’s truly belittling.

I wish the NYSC officials will do better in this aspect.

The African Continental Free Trade Area (AfCFTA) is an initiative of the African Union to create a single economic market of 1.2 billion people and a $3.4 trillion dollar opportunity by eliminating the common frictions which affect intra-African trade.

The Rule of Origin states that only goods which are manufactured with local inputs in member countries can be exported to other territories that belong to the same market and enjoy tariff free status. Due to the fact that with the exemption of South Africa, most member states do not have strong industrial base to produce most of the goods their citizens consume locally and as such resort to imports majorly from the Western and Eastern markets. Due to this construct, some African countries have economic partnership agreements skewed against their favor which makes it possible for an industrialist in Europe, America or China to produce goods in their markets, ship them down to African states they have trade relations with and have them repackaged as locally manufactured products so that they can easily enter large markets on the continent such as Nigeria, Ethiopia, Kenya, etc without paying duties.

This problem can be sorted out with the application of blockchain technology. The African Customs Union and African Manufacturers Association comprising the participating states will create a single digital distributed secure database which will contain information on all products locally manufactured according to the laws of each country in the regional alliance and monitor their logistics and supply chain up to their exports across the borders so that the Customs of every member state already has real time data of each product from neighboring and other distant African countries coming into their territories. 

The importance of this is to ensure that no local industrialist will collude with non-African countries to breach the rules of origin by bringing finished products and packaging them as indigenous manufactured leading to the creation of dumping grounds for smuggled products which is an economic sabotage that can make the common market to collapse.

The AfCFTA Secretariat needs to consider the adoption of this solution before the full implementation of the Pan African economic market to prevent unfair trade practices that could result in litigation and withdrawal of membership by aggrieved members.