Background:
Economies
across the globe have begun responding to the Covid-19 pandemic not only medically but in economic terms, with various monetary and fiscal interventions being implemented. Nigeria is not left out with some monetary and fiscal measures having recently been announced or implemented by the Executive Arm of the Federal Government of Nigeria. The latest in the Nigerian offing is its legislative response, styled, the Emergency Economic Stimulus Bill, 2020 (the "Bill"). The Bill was passed by the House of Representatives (the "House") of the Nigerian National Assembly on March 24, 2020. By virtue of Nigeria's bi-camera legislature, the Bill is now before the Nigerian Senate. The Bill is long-titled, "A Bill for an Act to provide for Relief on Corporate Tax Liability, Suspension of Import Duty on Selected Goods and Deferral of Residential Mortgage Obligations to the Federal Mortgage Bank of Nigeria for affixed term to protect jobs and alleviate financial burden on citizens in response to the economic downturn occasioned by the outbreak of COVID-19 disease."
In this Briefing Note, we highlight, summarize and make relevant observations on the 3 (three) fiscal and related incentives provided by the Bill.
The Bill
Our Thoughts in Conclusion:
The next stage in the legislative process of the Bill becoming law is its presentation before the Nigerian Senate which is currently on recess. It is expected that given current emergencies, as the Bill is eponymously called, the leadership of the Nigeria Senate will call for the relevant emergency sessions to consider the provisions of the Bill. It is our hope that the Senate will significantly improve the Bill by providing the measurable and more tangible fiscal stimulus that the Nigerian economy requires in the wake and aftermath of this pandemic. It is important that adequate economic and scientific thoughts are given to what Nigerians and Nigeria actually need to bounce back from the pandemic. For instance, it is largely debatable why the Bill does not reference or directly revise any of the provisions of the subsisting Finance Act, 2019. This is in light of the fact that the Finance Act was enacted on the premise of certain assumptions for Nigeria's 2020 economy; assumptions that the current pandemic has negatively revised. The Bill is an opportune avenue for introducing sensitive fiscal palliatives that address the now erroneous assumptions of the Finance Act, particularly for the major drivers of the Nigerian economy. A significant impact of the Finance Act is its new Minimum Tax Rule that now requires all major players in the Nigerian economy to compulsorily pay a minimum 0.5% of their turnover as CIT. Reducing or removing this threshold, at least for the 2020 'pandemic' year, may be a more significant palliative for the major drivers of the Nigerian economy. The value of a palliative of this nature can easily be quantified in monetary terms. Quantification of stimulus plans or palliatives is a global norm; the Canadians are having a +$82billion aid of which $27billion is in direct funding and $55billion in tax deferrals; the United States' Senate has just passed a $2 trillion economic stimulus plan. Nigeria's National Assembly needs to put a significant value to the Bill, by improving its contents on the strength of core economics. Our legal appraisal of the Bill and, hopefully, the resulting legislation is the least in the value chain of what Nigerians desire to see.
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