The House of Representatives has launched an investigation into the alleged abuse of tax incentives, waivers, and exemptions, which has reportedly cost the federal government an estimated N8 trillion in lost revenue.
Its decision followed the adoption of a motion of urgent public importance moved by the member representing Oriade/Obokun Federal Constituency, Osun State, Oluwole Oke, at plenary yesterday.
The House had initially adopted the motion on July 14, 2023, but Oke’s renewed push suggests that no significant action had been taken on the matter.
Speaking on the motion, Oke noted that taxation of incomes, profits, capital gains, exports, and imports fell exclusively within federal government’s control, with fiscal policies designed to stabilise economic conditions.
“Some of the tools available to monetary and fiscal policy authorities to stimulate economic activities in certain sectors include tax waivers, tax breaks, tax exemptions, and tax incentives. The government grants these incentives to attract investments into specific industries,’’ he said.
The lawmaker recalled that successive administrations had issued fiscal policy measures and tax modification orders in line with national economic strategies, with some interventions yielding positive results.
He, however, lamented that despite the government’s good intentions, tax incentives and waivers had created a “major black hole in the country’s finances,” mainly due to abuses by companies benefiting from the scheme.
Citing available data, Oke revealed that Nigeria loses an estimated N8trillion annually to tax waivers, with N6trillion lost to companies that exploit the system and N2trillion to mismanaged waivers.
Oke, who highlighted specific fiscal items prone to abuse, including capital allowances, investment allowances, pioneer status incentives, free trade zone exemptions, and VAT exemptions, said: “These loopholes have significantly impacted Nigeria’s tax-to-GDP ratio, which currently stands at 10.6%, one of the lowest in Africa.’’
Oke warned that if urgent steps were not taken to curb the abuse of tax waivers, Nigeria could face a severe fiscal crisis.
“If this situation persists, Nigeria may not only be on the verge of a fiscal collapse but could suffer a fate similar to Venezuela—where a country with vast resources finds itself in deep economic turmoil, recession, and depression,’’ he stated.
Consequently, House mandated its committees on industry, finance, and commerce to investigate the issue and submit a report within four weeks for further legislative action.
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