On 25 March 2020, the House of Representatives (HoR) of the Federal Republic of Nigeria passed the Emergency Economic Stimulus Bill. Amongst other provisions, the Bill seeks to put measures in place to protect jobs and alleviate the financial burden on citizens in response to the economic downturn occasioned by the outbreak of the COVID-19 (Corona Virus) disease. The Bill now awaits passage by the Senate and Presidential assent before its provisions will become effective.

Details

Following the outbreak of the COVID-19 pandemic across various countries including Nigeria, the HoR considered and passed the Emergency Economic Stimulus Bill in a bid to mitigate the adverse economic effects resulting from the outbreak of the pandemic in Nigeria.

Some specific provisions of the Bill are highlighted below:

1. Rate of Tax and Special Tax Rebate

  • Employers duly registered under the Companies and Allied Matters Act that do not lay-off their staff between 1 March 2020 and 31 December 2020 will be entitled to 50% income tax rebate on the total amount due or paid as Pay-As-You-Earn Tax (personal income tax) on behalf of their employees;
  • An employer will still be entitled to the above stated relief where an employee dies of natural causes, voluntarily leaves the employment, had indicated intention to leave the employment before 1 March 2020 or where the employee breaches the Labour Act;
  • The President is empowered to extend the rebate period for the duration during which the COVID-19 disease remains an urgent and severe public health emergency, subject to ratification by a majority of the members of the National Assembly.

2.   Deferral of Payment of Mortgages under National Housing Fund

  • All payment of mortgage obligations on residential mortgages obtained by individual contributors to the National Housing Fund will be deferred for 180 days effective 1 March 2020;
  • The President is empowered to further extend the deferral period for a period of up to 180 days, subject to ratification by a majority of the members of the National Assembly.

3.   Import Duty Waivers on Medicines and Medical Goods

  • Import duty waiver will be granted on Medical Equipment, Medicine, Personal Protection Equipment and other medical necessities required for the treatment and management of the COVID-19 disease in Nigeria;
  • The Minister of Health is empowered to specify the goods that qualify for import duty waiver by way of Regulations published in the Gazette;
  • The waiver is to take effect from 1 March 2020 to 31 December 2020 and the President may extend this waiver in line with his power to vary import duties under Section 13(1) of the Customs, Excise, Tariffs etc. (Consolidation) Act.

Implication

This Bill, if signed into law, will have significant impact on businesses and taxpayers as it seeks to compensate employers that do not lay-off employees during the period of the crisis by providing tax rebates. In addition, with its stipulated import duty exemptions, necessary medical equipment and facilities will be more easily shipped into the country and should become available at affordable costs. For the mortgage moratorium, individuals with residential mortgage obligations to the government will not be required to make any repayments during the approved period.

The passage of the Bill by the HoR, is aimed at providing relief to employers and individuals and minimising the negative effects on the Nigerian economy in the light of the global pandemic. It is therefore a step in the right direction and it is expected that the Senate will also quickly pass the Bill. In addition to this, it is hoped that Government will provide additional economic palliatives as has been done in other countries impacted by the outbreak. In doing this, it is important that Government engages stakeholders (taxpayers, consultants, employers, businesses, importers, tax authorities at the Federal and State levels etc.) to understand the areas of need in the economy and ensure that the objectives of any stimulus is achieved. This will also help to achieve synergy and efficiency in the implementation of the intended reliefs. We will continue to monitor developments with respect to the Bill and its further consideration.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.