Comparación de resultados

144 developmental.However, these reliefs may not excite investors when they consider other provisions of the law that are arbitrary. For instance,under the provisions of Section 33(1) of CITA⁵⁵⁴ there is the payment of minimum tax. Thus, where in any year of assessment a company results in a loss, or where a company‘s ascertained total profits results in no tax payable, or tax payable which is less than the minimum tax, there shall be levied and paid by the company, the minimum tax as prescribed by Section 33(2) of CITA.⁵⁵⁵

Umenweke described this provision as minimum tax relief ⁵⁵⁶ with the greatest respect this provision appears not to be a relief even though it seeks to reduce the tax burden of the company.

This is because tax should be based on profit thus, where a company suffers a loss; the appropriate relief should be exemption from tax for that year of assessment. This provision appears to be arbitrary; it is aimed at ensuring that a company pays tax even when it has no taxable income. It is not a relief but a burden on tax payers, it is therefore suggested, that the section be expunged from the law.

145 (b) it is expedient in the public interest to encourage the development or establishment of any industry in Nigeria by declaring the industry to be a pioneer industry and any product of the industry to be a pioneer product.

An application may also, be made at any time for any industry to be included in the list of pioneer industries or products.⁵⁵⁸ The President may from time to time, on any ground which appears sufficient, amend the list of pioneer industries and pioneer products.⁵⁵⁹Provided that when an industry or product is deleted from the list, pioneer certificate shall no longer be granted to any industry or product related to the deleted industry or product.⁵⁶⁰Pioneer status is a tax holiday granted to qualified or eligible industries anywhere in the Federation.⁵⁶¹At the moment there are several approved industries and products declared pioneer industries and products.⁵⁶²

The listing of these industries and products as pioneer status and products, is to encourage local production of importedgoods in Nigeria. It is also, targeted at attracting foreign investors, to establish manufacturing industries in Nigeria.

Application for a pioneer certificate is addressed to the Minister of Industry,⁵⁶³and shall state the grounds on which the applicant relies on.⁵⁶⁴If the Minister is satisfied with the application, he shall submit the application to the President for approval.⁵⁶⁵A company cannot apply for a pioneer certificate unless the estimated cost of qualifying capital expenditure to be incurred by the company on or before production day (if the application is approved) is an amount which-

(a) In the case of an indigenous controlled company, is not less than N50, 000 or

557Cap 17, LFN 2004.

558Section 1(2).

559Section 1(2).

560Section 1(6).

561Investment Incentives, www.nipc.gov.ng/.Accessed on 5^th May, 2014.

562 See Ibid, for the list of approved products and industries.

563Section 22(1) of the ID (ITR) Act. Presently, it is the Minister of Trade and Investment.

564Ibid, Section 2(2).

565Ibid, Section 2(6).

146 (b) In the case of any other company is not less than N150, 000.⁵⁶⁶

There appears to be a conflict between the provisions of Section 1(4) of the ID (ITR) Act⁵⁶⁷ and the provisions of Section 3 of the Pioneer Status Incentive Regulation 2014 (hereinafter referred to as PSIR 2014) made pursuant to Section 30 of the NIPC Act.⁵⁶⁸The dichotomy between an indigenous controlled company and a foreign controlled company under the ID (ITR) Act⁵⁶⁹is done away with under the PSIR 2014also, the qualifying capital expenditure is increased from N50,000.00 (Fifty Thousand Naira) for indigenous controlled company and N150,000.00(One Hundred and Fifty Thousand Naira) for other companies was increased to N1,000,000.00 (One million naira). The qualifying capital under the ID(ITR) Act⁵⁷⁰ appears to be too low, considering present day realities.

The problem is which of this law is applicable. Section 23 of the NIPC Act⁵⁷¹ gives the Nigerian Investment Promotion Commission powers to issue guidelines and procedures, which specify priority areas of investment and prescribe applicable incentives and benefits, which are in conformity with government policy. Also, Section 30 of the NIPC Act⁵⁷² gives the NIPC powers to make regulations. The combined effect of Section 23 and 30 of the NIPC Act⁵⁷³ clearly empowers the NIPC to make the Pioneer Status Incentives Regulations 2014.

It is the researcher‘s position that the provisions of the ID (ITR) Act⁵⁷⁴ should prevail. This is because; the ID (ITR) Act⁵⁷⁵ is the specific legislation on tax incentives and issuing of pioneer

566Ibid, Section 1(4).

567Op cit.

568 Cap N 117, LFN 2004.

569Op cit.

570Op cit.

571Op cit.

572Op cit.

573Op cit.

574Op cit.

575Op cit.

147 certificate. The NIPC Act⁵⁷⁶ is on investment promotion generally; it is not a specific legislation on tax incentives. This submission, finds support in Oando v FBIR⁵⁷⁷ where there was a conflict between the provisions of the Companies Income Tax Act⁵⁷⁸ and the Companies and Allied Matters Act⁵⁷⁹ on the issue of capital allowances the Appellant was entitled to. The Federal High Court held per Mustapha CJ. As follows:

It is pertinent to say it is indeed CITA that is specific legislation on Taxation of Companies and not Companies and Allied Matters Act which has general provision on dividends and profits in its Part XII. It is the provision of CITA on Taxation that should prevail over that of the Companies Act on Dividends and Profits.⁵⁸⁰

It is further opined that Section 1(4) of ID(ITR) Act⁵⁸¹ should be amended to give powers to NIPC to review the qualification for pioneer status whenever necessary. Also, Section 2(1) of the ID (ITR) Act⁵⁸² should be amended to the effect that application for pioneer certificate should be made to the NIPC.

A pioneer company enjoys a tax relief for a period of three years in the first instance,⁵⁸³ which can be extended for a period of one year and thereafter another period of one year or for straight period of two years.⁵⁸⁴The tax holiday period of maximum of 5 years was reviewed to 7

576Op cit.

577(2009) 1 TLRN, 61 pp at 81.

578Op cit.

579Op cit.

580Op cit.

581Op cit.

582Op cit.

583Section 10(1) of ID (ITR) Act, op cit.

584Ibid ,Section 10(2).

148 years for pioneer industries located in economically disadvantaged Local Government Areas of the Federation.⁵⁸⁵

A pioneer company enjoys capital allowances and losses incurred before the end of the pioneer period. Such allowances shall be deemed to have been incurred by the company on the day on which its‘ new trade or business commenced for the purpose of computing total profit.⁵⁸⁶Also, dividends declared out of pioneer profits are not taxable in the hands of the shareholder.⁵⁸⁷ Furthermore, the net qualifying expenditure during the pioneer period is accumulated and isqualified for both initial and annual allowances in the new business.⁵⁸⁸These benefits of a pioneer company will certainly aid the growth of trade and investments in certain key sectors of the economy. However, there are some restrictions on the operations of a pioneer company. Some of them are:

(a) A pioneer company during the period of the tax holiday shall not carry on any trade or business other than a trade or business, the whole of the profits of which are derived from its pioneer enterprises.⁵⁸⁹

(b) Also, it cannot distribute dividends in excess of the amount by which the profit and loss account is in credit at the date of any such distribution.⁵⁹⁰

(c) A pioneer company shall not grant any loan without first obtaining adequate security and a reasonable rate of interest for any such loan.⁵⁹¹A pioneer company shall not be

585Section 16 of ID (ITR) Act, op cit.

586Ibid, section 14.

587Ibid, section 17.

588 L Soyode and SO kajola, Taxation Principles and Practice in Nigeria (Ibadan: Silicon Publishing Company, 2006) p. 421.

589 Section 12(1) of ID(ITR) Act, op cit.

590Ibid, section 18(a).

591Ibid, section 18(b).

149 entitled to any relief under Section 28 of CITA.⁵⁹² The relief under section 28 of CITA⁵⁹³ relates to waivers or refund of liability of expense.

There is also, tax holiday of three years for a new company going into the mining of solid mineral.⁵⁹⁴ Similarly; a company engaged in gas utilization (downstream operations) enjoy a tax holiday for three years and an additional two years, subject to satisfactory performance of the business.⁵⁹⁵ Also, under the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act,⁵⁹⁶the Nigeria LNG Limited was declared a pioneer company by the provisions of Industrial Development (Income Tax Relief) Act.⁵⁹⁷ However, the tax holiday was to last for ten years or five years when the cumulative average sales price of liquefied natural gas reaches $3(Three Dollars)/mmbtu.⁵⁹⁸ Thus, the relief is no longer applicable, as the 10 years moratorium on fiscal incentives and guarantees to the NLNG ended on October 9, 2009.⁵⁹⁹