The House of Representatives on Thursday resolved to investigate allegations of abuse of tax incentives and exemptions granted to companies, which reportedly cost Nigeria ₦8 trillion annually in lost revenue.
The resolution followed the adoption of a motion moved by Hon Busayo Oluwole Oke (Osun -PDP) on the urgent need to probe the indiscriminate use and misuse of tax incentives, which had created a major financial burden for the federal government.
While moving the motion, Hon Oke noted that while tax incentives are a common fiscal tool used by governments to stimulate economic growth, in Nigeria, he lamented that these incentives have been largely abused by beneficiary companies, leading to significant revenue losses.
Citing available data, the lawmaker stated that out of the ₦8 trillion lost annually, an estimated ₦6 trillion is attributed to corporate entities that exploit loopholes in the system, while only ₦2 trillion worth of waivers genuinely contribute to the government’s economic objectives. The abuses reportedly stem from capital allowances, investment allowances, Pioneer Status Incentives, Free Trade Zone exemptions, and Value Added Tax (VAT) exemptions.
The motion also highlighted concerns that the persistent revenue leakages have contributed to Nigeria’s low Tax-to-GDP ratio of 10.6%, one of the lowest in Africa. As a result, the federal government has been forced to rely heavily on loans, grants, and foreign aid to bridge its widening budget deficit.
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According to him, “If urgent steps are not taken to investigate this situation, Nigeria may find itself on a fiscal cliff,” the lawmaker warned, likening the economic risks to Venezuela’s financial crisis, where a resource-rich country plunged into economic collapse due to poor fiscal management.”
When the motion was put to voice vote by the Deputy Speaker, Benjamin Kalu who prescribed over the plenary session, it was unanimously supported by members.
The House mandated its Committees on Industry, Finance, and Commerce to conduct a thorough investigation into the alleged abuses and report back within four weeks.
The outcome of the probe is expected to inform policy decisions aimed at reforming Nigeria’s tax incentive framework and plugging revenue leakages.
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