FG Plans N2.5bn Tax Credit for Non-Oil Exporters
In a bid to stimulate non-oil export growth, the Federal Government has made a provision of N2.5bn tax credit for exporters in this sector in 2020.
The amount is part of the N10.3tn expenditure contained in the 2020 budget which was signed into law last week by the President, Major General Muhammadu Buhari (retd), following its passage by the National Assembly.
The tax credit is expected to bring some succour to non-oil exporters after the prolonged delay that has plagued the release of the Export Expansion Grant.
The EEG is an initiative of the Federal Government that was meant to encourage exporters of non-oil products, including agro-commodities in order to cushion effects of infrastructural deficiencies and reduce overall unit cost of production.
It was introduced through the Export Incentives and Miscellaneous Provisions Act, Cap 118 of 1986 to enhance the contributions of non-oil export to the national economy.
The mechanism is such that a financial credit is applied on the value of export of products from Nigeria ranging from five per cent to 30 per cent.
The financial credit is not cash funded, but provided as Negotiable Duty Credit Certificate which could be applied against import duties on other items.
It was suspended by the Federal Government in 2014 following allegations of abuse of the scheme by exporters.
However, after a series of reviews of the scheme, it was reintroduced in the form of tax credit by the government.
Experts said the reactivation of the EEG scheme was vital for the diversification of the economy through non-oil exports.
A former Director-General, Abuja Chamber of Commerce and Industry, Dr Chijioke Ekechukwu, said that the government would need to step up its diversification agenda with credit policy for manufacturers.
To simulate the economy, he said there was a need for more reforms to further reduce the cost of doing business and interest rate.
Ekechukwu said, “The country came out of recession as a result of an improved production capacity and improved international oil prices.
“These two major reasons are actually out of the control of the government and so achieving that feat cannot be said to be a plus because if that situation had not happened, it is possible that we won’t have been out of recession.
“In the area of growing the non-oil sector, we are yet to make any significant effort that can take the country to the path of sustainable growth.”
He added, “The non-oil sector on its own has the capability to drive the economy in case the price of oil that is not within our control starts declining.
“So there is a need to put in more efforts in agricultural development, boost the export market and the manufacturing sector.”