Follow Us on Google
Fred Itua, Abuja
Experts have called on the Federal Government to reduce taxes on renewable energy products by scaling down the Value Added Tax (VAT) to two per cent.
The experts under the platform of Environmental Rights Action/ Friends of the Earth, Nigeria (ERA/FoEN),also called on the National Assembly to make laws for more relaxed fiscal policies for renewable energy products.
Executive Director of the organisation, Godwin Ojo, at a press conference in Abuja, said the reduction in taxes will assist grow the sector.
Ojo who lamented that 60 – to 70 per cent of Nigeria’s 200 million population do not have access to electricity, said diversifying into renewable energy sources is the best option for the country.
Ojo said although tax regimes might help African governments rake in revenues from import tariffs, it also had the disadvantage of contributing to the slow pace of energy development.
“The diverse sources of tax is worrisome with five per cent stamp duty, five per cent on solar panels, 25 per cent on batteries and inverters and other sundry taxes which raises the tax burden to about 30 per cent on products.
“We strongly propose that lowering taxes on renewable energy products will go a long in the promotion of energy access for all. Therefore, the proposed hike on VAT from five per cent to 7.5 per cent in Nigeria, if at all it will be implemented, should not be extended to solar lighting equipment and clean cook-stoves.
“We strongly advocate for reduction of VAT to two per cent on renewable energy products; five years tax moratorium for new renewable energy products to improve energy access for all; five years tax holiday for pioneers status in indigenous renewable energy businesses in Nigeria,” Ojo said.
Meanwhile, Chairman, Senate Committee on Finance, Solomon Adeola has said that the Finance Bill was not only about VAT.
He said that it was a composite bill seeking amendment in seven Acts of the National Assembly with removal of taxes for some sectors in the economy contrary to popular sentiment about the executive bill being about increase in VAT.
He said the bill targeted at reforming the tax regime would involve amendments of seven Acts of the Parliament; Petroleum Profit Tax, Customs and Excise Tariff Act, Company Income Tax Act, Personal Income Tax Act, Value Added Tax, Stamp Duties Act and Capital Gain Tax.
“Studying the executive bill that was referred to my Committee after passing second reading on the floor of the senate, I realised that there are lot of ignorance and limited knowledge of the content and import of the Finance Bill.
” It is targeted at not only increase in revenue for the government but removing some conflicting and confusing aspects of our laws that had given rise to legal disputations in the past leading to huge loses of revenue for government.
“Beyond the 2.5 per cent increase in the VAT, there are equally changes in the Value Added Tax Act 2004 that increase the number of items exempted from VAT to the extent that Nigeria may have the highest number of such exemptions in Africa and beyond.
“Also the amendment of the Company Income Tax Act if passed will favour Small and Medium Scale Enterprises (SMEs) by reduction in applicable taxes with first four years robust incentives,” Adeola said.
The public hearing on the bill is slated for tomorrow.
