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The Nigerian Economic Stimulus Bill 2020 - How Much Cash Would Your Business Get?

Nigeria Economy	1231 VIEWS
Nigeria Economy
1231 VIEWS

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Thursday, March 26, 2020 /05:32 PM / By Balogun Harold / Header Image Credit: @HouseNGR

According to a CNN report, the economic stimulus package proposed by the United States, contemplates a total of, $250 billion set aside for direct payments to individuals and families, $350 billion in small business loans, $250 billion in unemployment insurance benefits and $500 billion in loans for distressed companies. Nigeria's House of Representatives also recently passed the Economic Stimulus Bill 2020, (the Bill) sponsored by the Speaker of the Federal House of Representatives, Honourable Femi Gbajabiamila.

Whilst we commend the sponsors of the Bill for taking the initiative and responding swiftly, It is our considered view that the wording and scope of the Bill does not provide the level of comfort that Employers of Labour in Nigeria require at this time. Here are the key details of the Bill , in short form.

1.Incentives to Employers of Labour in Nigeria

It is proposed that Employers of labour in Nigeria be entitled to 50% income tax rebate on the total of the actual amount due or paid as Pay As You Earn (Tax) under the Personal Income Tax Act. (the Tax Rebate). To qualify for the Tax Rebate, a Nigerian Employer of Labour must be able to demonstrate that

(a) It has maintained the same employee status that it had before the outbreak of the Corona Virus and has not retrenched or terminated the employment of its staff between March 1st 2020 and December 31, 2020 (Rebate Period)

(b) That it is not "wholly or partly" subject to the provisions of the extant Petroleum Profits Tax Act (PPTA). The PPTA is ordinarily applicable to oil and gas companies operating in Nigeria. The point to be made here is that, as proposed, the Tax Rebate will not apply to oil and gas companies operating in Nigeria.

(c) Its employees who left their jobs during the Rebate Period either died of natural causes, voluntarily resigned their appointment, had expressed a desire to resign their employment before March 1, 2020 or are in breach of the provisions of the Labour Act, applicable in Nigeria.

It is further proposed that the President should have the power to extend the Rebate Period, for the pendency of the Corona Virus outbreak, where the President considers such extension necessary. However, the exercise of this power is subject to the approval of the "majority of the members of the National Assembly".

It's important to note that there is no mandatory prohibition of employment termination during the pendency of the Corona Virus outbreak. Employers of labour only need to choose between terminating the employment of employees (assuming this becomes necessary) and the proposed Tax Rebate.

2. Incentives to Importers

It is proposed that importers of "medical equipment, medicines, personal protection equipment and other such medical necessities as may be required for the treatment and management of Covid-I9 Disease in Nigeria", be excused from paying any import duty on the foregoing items.

3. Temporary Suspension of Mortgage Obligations to the Federal Mortgage Bank

It is proposed that all payment of mortgage obligations on residential mortgages obtained by individual contributors to the National Housing Fund be deferred for a period of 180 days from March 1, 2020.

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