Investor Presentaiton
69
The Country and its
institutions
Business Organisation Labour and Social
and Regulation
Security Regulations
The Nigerian Financial
Services Industry
Tax System
Foreign Exchange
Transactions
Investment in Nigeria
Accounting and
Auditing Requirements
Importation of Goods Exportation of Goods
7.5.2.5
7.5.3
Gas Industry Incentives
COVID-19 - Economic
and Fiscal Measures
7.5.2.6
7.5.2.7
Export Development Fund (EDF)
The EDF administered by NEPC is a special fund set up by the
Federal Government to provide financial assistance to exporters to
cover a part of their initial expenses incurred on export promotion
activities, such as participation in export-related training courses,
seminars, workshops, export market research, advertising and
publicity campaigns in foreign markets, participation in overseas
trade missions, trade fairs, exhibitions, trade information
gathering, organisation of joint export groups and mutual export
guarantee associations.
Currency Retention Scheme
Section 19 of the FEMPP Act enables exporters to open and
maintain foreign currency domiciliary accounts into which export
proceeds can be paid and retained. Exporters have unfettered
access to funds in their export proceeds domiciliary accounts with
minimal documentation.
Rediscounting of Short-term Bills
This incentive entitles an exporter to discount bills of exchange
and promissory notes with his bank to increase his liquidity and
minimise cash flow problems before export proceeds are realised
from overseas buyers.
7.5.2.8 Tax Incentives
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The profits derived from the following activities are tax-exempt:
profits derived from exports, provided that the proceeds from
the export are used for the purchase of raw materials, plant,
equipment and spare parts;
profits of a company whose supplies are exclusively imported for
the manufacturing of products for export, where the company has
obtained a certificate of purchase of the inputs of the exportable
goods from the exporter;
Profits/gains of export-oriented undertakings established within an
export processing zone; and
Interest income earned by banks on loans to companies
manufacturing for export. The exemption will apply as prescribed
in the Third Schedule to the CITA, where the bank is able to
present the certificate issued by the NEPC stating that the level
of export specified has been achieved by the manufacturing
company (the borrower).
Investment in Nigeria Guide - 8th Edition
7.5.3.1 Gas Utilisation (Downstream Operations)
7.5.3.2
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Enhanced investment allowance of 35% on assets acquired, or
a 3-year tax holiday which is renewable for an additional period
of 2 years, subject to satisfactory performance;
An annual allowance of 90% plus an additional investment
allowance of 15% after the tax-free period. Where a gas
company opts for the enhanced allowance, it will not be
entitled to the 15% investment allowance;
Tax free dividends during the tax holiday, provided that the
investment for the business was in foreign currency or the
value of imported plant/machinery introduced is not less than
30% of the equity share capital of the company;
Plant, machinery and equipment purchased for gas utilisation
are exempt from VAT; and
Profit from gas utilisation operations is subject to tax under the
CITA.
Finance Act 2020 clarified that gas utilisation incentives are not
restricted to companies set up to engage solely in downstream
gas utilisation. Consequently, the incentives may extend to
companies that carry on other kinds of trade or businesses
alongside the trade or business of gas utilisation in downstream
operations. However, the gas utilisation incentives are mutually
exclusive of the pioneer status incentives and the incentives
provided under Section 11(1) of the PPTA, regarding the same
qualifying capital expenditure.
Gas Utilisation (Upstream Operations)
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Gas income is subject to tax under CITA at the rate of 30%;
Capital investment on facilities and equipment required
to deliver associated gas in usable form at utilisation or
designated custody transfer points is treated as part of the
capital investment for oil development;
Investment required to separate crude oil and gas from the
reservoir into usable products is also considered as part of oil
field development; and
Gas transferred from a Natural Gas Liquid (NGL) facility to the
gas-to-liquids facilities is subject to 0% Petroleum Profits Tax
and 0% royalty.
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