The House of Representatives on Tuesday resolved to investigate tax incentives and waivers granted to multi-national companies in Nigeria to ascertain their suitability and economic impacts.
The resolution, which was referred to the House Committees on Finance and Public Accounts, followed a motion by Rep. Kehinde Odeneye (APC-Ogun).
The motion was unanimously adopted by members through a voice vote.
Moving the motion, Odeneye called the attention of the House to the `indiscriminate application’ of tax incentives as pre-conditions for attracting foreign investments to the country.
Odeneye explained that Foreign Direct Investment played a critical role in an economy as it was a source of foreign exchange, inflow of technology, skills and management expertise and also growth and development.
He said it must be carefully applied and managed to achieve balance between industrialising the economy via FDI and growing local businesses.
“Japan and South Korea are two well-known examples of countries that thrived from obtaining FDI in the aftermath of war.
“The 2014 Ernest and Young Africa Attractiveness Survey rated Nigeria as one of Africa’s top investment destinations.
“The Nigerian Investment Promotion Council also reported in October 2015 that Nigeria receives an average of six billion dollars in FDI annually.
“It is disturbing that tax incentives are given to companies in the hope that foreign investors will bring in capital to support economic development and create employment.
“There is little evidence that tax incentives have increased investment,” he said.
Lawmakers in their various contributions supported the motion, saying that policy on tax waiver had made little or no positive impact on the nation’s economy.
Rep. Mukhtar Ahmed (APC-Kaduna) said that tax incentives were very important to the development of the private sector.
“But if we continue to allow anybody who is in a position of authority to begin to issue tax waivers to individuals and companies, then there is a problem.
“There is no way any agency of government can be allowed to exercise the powers which the constitution has given to the National Assembly,” he said.
Rep. Herman Hembe (APC-Benue) said that the Federal Government had over the years delegated the authority to the Ministry of Finance.
According to him, this has given such leverage to companies they feel are pioneer companies and need to stand on their feet before they can start paying taxes.
“These policies have gone on in the last five to six years wherein Nigeria has lost billions of naira.
“Nigerians deserve to know those people responsible for granting these waivers and their beneficiaries so that we can know what their contributions to the economy of this country are,” he said.
Rep. Nnenna Elendu-Ukejeh (PDP-Abia) reminded the House that this was not the first time it deliberated on the issues of tax waiver or incentives given to companies that were foreign in outlook.
“We need to do something about the arbitrariness of the administration of this tax regime.
“We also need to scrutinise the conditions of the companies enjoying these tax rebates at the expense of other competitors and the economy,” she said.
The Majority Leader, Rep. Femi Gbajabiamila, commended Odeneye for bringing the motion.
Gbajabiamila said that “coming from the background of a chartered accountant who knows the maths and intricacies of tax matters, the motion could not have come at a better time.
“One thing that I frown at in this whole scenario is the incidence of tying tax incentives to the attraction of foreign investment.
“Once precondition for bringing foreign investments into the country is that we allow indiscriminate issuance of tax incentive, then we have done it upside down and in the wrong way.
“Yes, it may not be the first time we are bringing this kind of issue like Rep. Ukejeh pointed out, but I would say this is the best time,” Gbajabiamila said.
The committees were given four weeks to report back as sought by Rep. Nkieruka Onyejeocha’s amendment that the resolution should include a timeline for the presentation of the investigative report.
