By Michael Eboh
Financial experts and senior executive officers of leading financial institutions in Nigeria, yesterday, commended the Federal Government for signing into law, the Finance Act 2019, stating that the new law would significantly improve the fortunes of Micro, Small and Medium Scale Enterprises, MSME, especially companies in the Fast-Moving Consumer Goods, FMCG sector.
According to a statement by Detail Commercial Solicitors, the financial experts who spoke at the 10th Detail Business Series, were unanimous in their views that exempting MSMEs with gross revenue of N25 million and below from Company Income Tax (CIT), would boost the contribution of MSMEs to economic growth.
For instance, Director, Transaction Advisory Services, Ernst & Young (EY), Abimbola Ogundare, stated that the new incentives provided by the Finance Act would make the MSMEs grow and be more efficient, thus positively affecting the everyday Nigerian in their employ.
Ogundare noted that as the largest producers of FMCGs in Nigeria, MSMEs account for the employment of about 70 to 80 per cent of employees in Nigeria, noting however, that though the government has exempted MSMEs whose gross revenue is N25 million and below from paying taxes, they should be brought into the nation’s tax net by getting them registered.
Ogundare said, “From the GDP contribution standpoint, MSMEs in Nigeria contribute about 45 to 50 per cent of the nation’s GDP and that is significant and in line with what you see anywhere in emerging markets where MSMEs contribute around that range. MSMEs also contribute about 10 per cent of the total export in Nigeria and about 40 per cent of that export is cashews, cocoa and sesames.”
Speaking in the same vein, Fiscal Policy Partner and West Africa Tax Leader, PwC, Taiwo Oyedele, explained that the Finance Act was the first of its kind in the last 20 years, especially as it has over 100 amendments and amended seven different tax laws.
Oyedele encouraged businesses to manage their tax affairs by seeking to understand the Finance Act, assess its impact on their operations, implement the areas relevant to their businesses as well as review and revalidate their tax positions.
Also speaking, Associate Partner, DETAIL, Chukwudi Ofili and Senior Associate, DETAIL, Anthony Ezeamama in a joint presentation while emphasizing the changes made by the Finance Act to the Companies Income Tax Act, Personal Income Tax Act, Value Added Tax Act, Customs, Excise Tariff, Etc (Consolidation) Act, and the Stamp Duties Act stated that the development has implications for different industries in the economy, including the energy and utilities sector; digital and electronic services, real estate investment companies, and banking and capital markets.
In his remarks, Deputy Managing Director, Afrinvest, Mr. Victor Ndukauba, stated that although financial reforms may have a positive effect on the Nigerian economy, the challenge of the investment climate and fiscal rules were just one element of consideration.
According to him, the biggest challenge facing the country at the moment is that of infrastructural deficit, as Nigeria still lacks the infrastructure that allows the efficient movement of goods, service, and people in good time, and with the basic required comfort.
He maintained that to solve these challenges, the government needs to essentially step back from undertaking projects by itself and act more from the regulatory perspective, and allow private investors to come in and take the equity risk, and leverage on that to drive efficiency.”
Head, Real Estate Finance, Stanbic IBTC Capital Limited, Tola Akinhanmi emphasized that the real estate sector requires some stability at this time, as assets needed to be stabilized and investor confidence needs to be improved.
Speaking on the purpose of the event, Ololade Ademoroti, Interface Officer at DETAIL stated that DETAIL’s business series was born out of the desire to provide a robust platform to engage industry experts on topical issues.
Noting that DETAIL which specializes exclusively in non-courtroom practice, remains one of the top law firms in the country, Ademoroti stated that DETAIL had identified the need to discuss the Finance Act and its implication for businesses in different sectors of the Nigerian economy.