Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, has reassured manufacturers that the current tax reform measures are not meant to hurt their operations.

Oyedele stated this during a hybrid stakeholder engagement with manufacturers, which focused on the implications of the new tax laws for the manufacturing sector. He noted that the manufacturing sector was critical to the government’s development agenda.

“Given the critical role the manufacturing sector plays in job creation, import substitution as well as value addition, the government cannot embark on any reform that will hurt it,” he said.

Oyedele said the new tax laws have various provisions that lighten the tax burden of manufacturers. He noted that the provision for tax refund has been strengthened in the new law for manufacturers.

“Before, when we pay taxes to the government, it goes to the government account and it is shared at the end of the month; nothing is left behind.

“So, when you need a tax refund, there is nothing left and it is difficult to get.

“Under the new law, before the government shares revenue, they must set aside the money for paying refunds to taxpayers because that portion is not revenue but liability to the government,” he said.

He said one of the biggest advantages for manufacturers under the reform is an input value-added tax (VAT) claim on assets and services in addition to inventories that they get under the old laws.

He highlighted some of the benefits of the reforms aimed at reducing the tax burden on manufacturers and simplifying compliance, including tax harmonisation, which eliminates multiple taxes to streamline operations, expanded input VAT credits and improved incentives for priority sectors.

Other listed benefits are promotion of technology adoption and automation to simplify and modernise tax compliance processes and elimination of burdensome compliance requirements, such as a certificate of acceptance for fixed assets as a precondition for capital allowance.