Are You Leveraging The Waivers and Palliatives Available for Businesses and Individuals In 2020?
No doubt, the outbreak of the COVID-19 pandemic has sent the global economy into a tailspin with massive ripple effects in Nigeria.
As global supply chains are disrupted, we’ve witnessed a significant loss of revenue and a decline in business growth even as entrepreneurs and business leaders try their best to navigate the volatile business landscape.
In response to these adverse effects, the public and private sector have launched programs, initiatives and interventions to support businesses in the wake of the pandemic. In addition to some emergency measures, tax relief, and financial support, governments at the federal and state levels have announced waivers and palliatives to aid businesses.
It is now left for discerning entrepreneurs and business leaders to avail themselves of these waivers and palliatives as many of these interventions offer valid business lifelines. In this article, we summarize some relevant waivers and palliatives that the federal and various state governments, as well as several MDAs, have announced to help businesses get through this challenging time. But the question is: As a business leader, are you leveraging these interventions?
Measures by the Federal Government - Emergency Economic Stimulus Bill, 2020
The House of Representatives recently proposed a bill for the enactment of the Emergency Economic Stimulus Bill, 2020 (the Bill) which seeks to provide the following:
- Tax rebates to businesses that refrain from laying off their employees from March 1 to December 31, 2020. The rebate will come in the form of a refund of the employer’s income tax. However, it does not apply to employers partly or solely regulated under the Petroleum Profits Tax Act (PPTA), 2004.
- The deferment of residential mortgage payments by individual contributors to the National Housing Scheme for 180 days starting from March 1, 2020. This is done to ease the financial strain of individual contributors who may face job loss challenges. The aim is to ensure that their funds are not sunk into committed fees/payments.
- Import duties on medical equipment, medicines, personal protection equipment, and other medical necessities required for the treatment and management of Covid-19 are waived from March 1 to December 31, 2020. This is expected to lessen the cost of such items while increasing their availability in the market.
Although this Bill is still awaiting the President’s assent, it is expected that the proposed reliefs should provide some succour to businesses and individuals if eventually passed into law. Payroll management service providers like SOL are quite excited about the 2020 Stimulus Bill, as they understand the impact such provisions would have on a business’ survival, especially for businesses that key into it.
Moratorium by the Federal Government of Nigeria
The Federal Government of Nigeria recently directed the implementation of:
(a) A three-month repayment for all TraderMoni, MarketMoni, and FarmerMoni loans.
(b) A similar moratorium for all Federal Government of Nigeria funded loans issued by the Bank of Industry, Bank of Agriculture, and the Nigeria Export-Import Bank.
Such moratoriums are useful, as they would reduce the number of loan defaults by businesses that have taken loans. They would also afford these businesses the time to re-strategize and focus on surviving the current crisis.
Measures by Customs & Ports Agencies
The Nigerian Ports Authority has directed all terminal operators to extend the suspension of all applicable terminal storage fees on shipments (demurrage) for fourteen days, which took effect from April 13, 2020.
Furthermore, the Nigerian Shippers’ Council mandated all shipping companies to suspend demurrage charges during the period of the COVID-19 lockdown. This mandate took effect from 30th March 2020.
Measures by Tax Administrators
The Federal Inland Revenue Service (FIRS) announced several palliative measures on March 23, 2020, as highlighted below:
- Extending the timeline for filing of value-added tax and withholding tax from the 21st day to the last working day of the month following the month of deduction;
- An extension of the due date for filing of companies’ income tax returns by one month (“revised due date of filing”);
- The filing of tax returns by taxpayers without audited financial statements (provided that the financial statements would be submitted within 2 months of the revised due date of filing);
- The use of electronic platforms for payment of taxes and processing of tax clearance certificates;
- Proposed creation of a portal where documents required for desk reviews and tax audits will be uploaded by taxpayers for online access by the tax authority; and
- The provision of a facility for submission of tax returns online by taxpayers via efiling.firs.gov.ng or by designated e-mail accounts published by the FIRS.
The Federal Capital Territory Inland Revenue Authority also introduced similar measures by extending the deadline for the filing of personal income tax returns by 3 months from 31st of March to 30th of June 2020. Similarly, the Bayelsa, Kebbi, Ogun and Lagos States Internal Revenue Service announced various tax reliefs and incentives for taxpayers in their States. For many businesses, the nitty-gritty of these tax issues could pose a challenge or even serve as a distraction. Such organizations will do well to work with reputable tax experts and service providers to make the most of these provisions.
Measures by the Central Bank of Nigeria
The Central Bank of Nigeria (CBN) announced palliative measures on March 16, 2020, intended to ensure the financial stability of the economy. The most critical interventions announced so far include:
- A N50 billion Targeted Credit Facility (TCF) which is essentially a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic. This is perhaps one of CBN’s most popular and successful intervention so far, as many people, particularly business owners, have reported getting credited without much ado.
- The CBN has approved a further moratorium for a year on all principal repayments, which takes effect from March 01, 2020.
- Interest rates have been reduced from 9% to 5% for one year on all CBN intervention facilities. This also took effect from March 01, 2020.
- CBN mandated all Deposit Money Banks (DMBs) to consider temporary and time-limited restructuring of the tenor and loan terms for organizations (in oil & gas, agriculture, and manufacturing industries) and individuals affected by the COVID-19 pandemic.
- CBN provided a N100billion credit support intervention to the healthcare sector to help in strengthening the sector's capacity to meet the potential increase in demand for healthcare products and services.
- CBN also extended the deadlines for compliance with the revised minimum capital requirements for all categories of MFBs by one year.
Measures by the National Agency for Food and Drug Administration and Control (NAFDAC)
The National Agency for Food and Drug Administration and Control (NAFDAC), in a bid to reduce the economic strain on MSMEs, particularly those involved in the manufacture, importation, exportation, advertisement, distribution and sale of food, drugs, cosmetics, medical devices, chemicals, and packaged water, reduced registration fees and embarked on assisting them with e-registration through the NAFDAC Automated Product Administration and Monitoring System (NAPAMS). The Palliatives for SMEs program (as it is called) runs concurrently in the six geo-political zones, including the FCT and Lagos state.
The palliatives include:
1) Zero tariffs for the first 200 SMEs to register their products from 15th May 2020.
2) 80% reduction in tariffs for the registration of SMEs’ products for three months.
3) Waivers on administrative charges for the late renewal of expired licenses for goods produced by affected SMEs.
Measures by the National Insurance Commission (NAICOM)
The National Insurance Commission (NAICOM) offered palliatives to insurance companies and intermediary service providers in the industry.
The submission of first-quarter returns was extended by one month, and the Commission approved waivers for delayed submission of renewal documents by Insurance Brokers, Loss Adjusters, and Insurance Agents during the period of the COVID-19 pandemic.
Business leaders around the world agree that current economic realities mean threading a thin line between profit and loss, as the pandemic and its adverse effect have stacked the odds against business growth or even survival. As such, the lifeline being offered by various governments, through these waivers and palliatives, is not only timely but also essential in keeping the economy from collapse. As the economy gradually re-opens and business activities resume in earnest, coming to grasp with the different provisions of these reliefs and support from the various tiers of government, and the right ways to leverage them, will come in very handy in the coming days.