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States to get $2.5m performance-based grants for tax relief

The Nigerian Governors’ Forum (NGF) on Sunday said that each state government would receive USD2.5 million performance-based grants for implementing tax relief programs for individual taxpayers and businesses to mitigate COVID-19 impact.

The forum disclosed this in a statement issued by the Head, Media and Public Affairs of NGF Secretariat, Mr. Abdulrazaque Bello-Barkindo, in Abuja on Sunday, after a virtual meeting jointly organized by the World Bank and the forum.

The forum, however, noted that only states that met the deadline and required conditions for the tax relief program would benefit from the incentive.

The virtual meeting, according to the statement, was held under the States’ Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for Results, a midwife by the Federal Ministry of Finance, Budget, and National Planning (FMFBNP).

“These efforts are being incentivized by a new Disbursement Linked Indicator (DLI) under the FMFBNP World Bank $750 million SFTAS Programme for Results.

“Eligible States will be rewarded with USD2.5 million each in performance-based grants if they announce by July 31 and implement by ‪ Sept. 30 a tax compliance relief program for individual taxpayers and businesses to mitigate the COVID-19 impact.

“However, there are criteria to be met if a state is to receive the $2.5m.

“These are that State announcements should be signed by the commissioner of finance or the executive chairman of the State Internal Revenue Service and published on State websites and in national dailies to ensure widespread awareness amongst taxpayers.

“Furthermore, the State government should issue to their tax officials and collecting agents, guidelines for the implementation of the reliefs to ensure consistent execution by all, and sundry.”

The statement disclosed that the 36 states were introducing tax relief programs to mitigate the impacts of the COVID-19 pandemic on businesses and individual taxpayers and ensure the speedy recovery of State economies.

The relief programs initiated in states across the board, according to the statement, have focused on five main tax activities.

These include an extension of filing and payment dates, tax moratoriums, waivers or reduction of penalties and interests over the extension period.

It noted that while some states were also offering rebates or discounts on taxes paid within a specific period, others were allowing the payment of taxes, fees and levies among others in installments.

Also, while state governments were currently experiencing a liquidity crisis of their own; and with limited capacity to borrow, it had become imperative that they find a balance between granting tax reliefs and maintaining revenues at a sustainable level.

“The extent to which government revenues will be impacted by these reliefs will depend on the type of relief that they grant and their ability to raise their tax efforts simultaneously, including offering incentives for greater tax compliance”, the statement said.

The virtual meeting according to the statement was attended by 125 participants from the 36 States of the Federation including State Commissioners of Finance and Executive Chairpersons of State Internal Revenue Services.

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