Senate approves tax holiday for export free zone

• Passes AMCON amendment bill
• Reps indict finance committee for default in budget 

OPERATORS in Nigeria’s oil and gas industry have been given tax holidays, as the Senate yesterday passed the new oil and gas free zone bill into law.

Titled “Oil and Gas Free Zones Act CAP Q5 LFN 2011 (Amendment) Bill, 2015 and sponsored by Senator Odion Ugbesia, the new oil also recommended that the appointment of the board chairman and members, which shall as well be subject to the confirmation of the Senate, must reflect federal character as provided in the 1999 Constitution.

Similarly, the Senate yesterday passed the Asset Management Corporation of Nigeria (AMCON) Amendment bill, sponsored by the Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Bassey E. Otu.

Otu said the amendment was necessary to strengthen AMCON’s operations and reposition it to serve the statutory purpose for which it was established.

The amended sections include 2(3), 16(5), 34(1), 34(2), 35, 46(2), 48,60, 61 and 62, all of which aimed at enhancing the agency’s ability to effectively carry out its statutory responsibilities. Meanwhile, the House of Representatives‎ yesterday indicted it’s standing committee on finance for failing to attend to the capital expenditure budget rollover bill of 2012 almost three years after it was committed to it.

Consequently, it reassigned the bill to the committee of the whole for reconsideration. The decision followed the adoption of a motion by Sunday Karimi (PDP, Kogi) on the floor of the House yesterday.

Presenting the report on the floor of the Senate, the Chairman, Joint Senate Committee on Trade and Establishment and Public Service, Ugbesia, said the most attractive feature of a free trade zone anywhere in the world is the tax holiday the investors enjoy as incentive and encouragement for their investment.

“Thus, an amendment of section 8, sub-section (3) (4) provides that an approved free zone enterprise or developer or operator shall be entitled to tax holiday, including but not limited to value added tax (VAT), capital gains tax, companies in one tax and industrial training fund, levies, duties and rates, wherever applicable,” he said.

The objectives of this amendment, Ugbesia noted, include the socio-economic development of the immediate community where the free zones and sub-zones are located, its immense contribution to the growth of the country’s Gross Domestic Product (GDP), domestication of business activities in the oil and gas sector, as well as generation or employment for the people.

Deputy Senate President, Ike Ekweremadu, who presided at the day’s sitting, said the passage of the bill was a major milestone in the quest to improve the nation’s oil and gas industry.

He added: “We know that the oil and gas (industry) is a major contributor to our economy, and as a responsible legislative house, we will continue to partner government and, on behalf of our people, improve the governance of this very vital sector.”

Otu added that the amendment would enhance and sustain the contributions of the banking sector to the economy. According to him, since the establishment of AMCON, Nigerian banks have been able to provide substantial funds towards the privatisation exercise.

By so doing, he noted, it has provided enabling environment for greater profitability in key sectors of the economy, such as aviation, oil and gas and manufacturing.

These contributions, he said, have led to a larger tax-base and higher tax generation to the Federal Government. The Senate President, David Mark, had stressed earlier during a public hearing for the bill that the amendment of the AMCON Act would clarify and remove certain ambiguities in the extant Act, especially those that inhibit and impede the operations of the corporation towards carrying out its mandate.

Highpoint of the amendment was Section 16(5), which stipulates that “a member of the board or any employee of the corporation shall not either directly or indirectly be involved in the purchase of the asset acquired by the corporation as part of, or in pursuant of the acquisition of an eligible bank asset or enforcement or realisation of any right relating to an eligible bank asset acquired by the corporation.”

Otu said the committee observed that total contribution to the fund stood at N293.41 billion as at December 31, 2013 and that in a situation where recoveries from the acquired toxic assets and proceeds from the sale of the bridge banks are not enough to meet the repayment of the bonds, the fund would be used to meet the shortfall and backstop AMCON’s bond obligations, in order to ensure that the Federal Government guarantee of AMCON’s bond is never called.

The new bill also provides that the Banking Sector Resolution Cost Fund would stand as additional safety during unpredictabilities; that the future banking resolution cost, which may result from operational and financial mismanagement by the DMBs, will not be borne by the Nigerian tax payers but rather by the banks, with money from the fund.

However, Karim’s motion noted that the capital expenditure budget rollover bill 2012 was read a second time on July 3, 2013, and committed to the committee on finance for further legislative action.

He argued that order XVII Rule 109 (g) of the Standing Orders of the House provides a time limit of 30 days for a committee to attend to any matter referred to it. He reminded the House that “the bill has been pending at the committee on finance for more than 60 days,” contending further that it was irresponsible for a committee to abdicate its responsibility, especially over a special assignment given to it.

Supporting the motion, Chairman of the House Committee on Public Petitions, Uzor Azubuike, said “the worst we can do is to indict the relevant committee for not doing its job,” just as the Chairman, House Committee on Rules and Business, Albert Tanimu Sam-Tsokwa, agreed that the committee has failed in its responsibility.

Deputy Speaker, Emeka Ihedioha, who presided at the session, put the motion to question and it was unanimously adopted. Abdulmumin Jibril (Bebeji/Kiru, Kano State) and Michael Yomi Ogunnusi (Ifako-Ijaye, Lagos State) are chairman and deputy chairman of the committee respectively Meanwhile, intermittent power outage lasting about half an hour at the National Assembly yesterday temporarily stalled proceedings on the floor of the House.

The outage, which occurred four times during the session, began at about 12:20p.m, prompting suspension of plenary.