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Ethiopia Moves Ahead Of Nigeria, Offers Tax Relief To Firms Affected By COVID-19 Pandemic 

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As recent pronouncement by Boss Mustapha, Chairman, Presidential Tax Force (PTF), COVID-19 on government’s unwillingness to reduce value Added Tax (VAT) continues to generate discourse by Nigerians and particularly the embattled business owners, Ethiopia has offered tax relief to companies affected by the Pandemic. 

According to a report from Bloomberg, monitored on the state television station, crediting Ethiopia’s Minister for Finance, Eyob Tekalign.

But to the contrary, even as the likelihood of increasing the burden of Nigerians with other levies to bourge dwindling fortunes of the country increases, the Federal Inland Revenue Service (FIRS), a few days ago, had offered a waiver on interests and penalties for tax debtors, if they paid the outstanding tax arrears in full, on or before May 31, 2020.

Similarly, some weeks ago, Nigeria’s Finance Minister Zainab Ahmed said that the Federal Government was considering giving tax relief to corporate organizations that made donations to the COVID-19 intervention funds as well as tax referral rather than reduction.

While Access bank Plc has become the first casualty of public criticism for opting to downsize and reduce salaries of its staff few weeks after making generous donation of N1 billion to the Federal government to fight the plague, it was gathered that FG’s tax referral option may not go down well with business operators and entrpreneures.
Specifically, mixed reactions have continued to trail the FIRS Chairman’s postulation that corporate organizations in sectors that were booming during this lockdown, occasioned by the Pandemic should make payments of their annual returns before the due date.

A lot of critics of that directive felt that it was insensitive of Government, who rather than give tax reduction, are asking companies that might be going through hard times to pay taxes upfront.

Some others however supported the Government’s idea, insisting that some sectors were making extraordinary income during this lockdown period, and as such, should bail out Government during this time of financial crisis.

But, while citing the Finance Minister, the Ethiopian Broadcasting Corporation reported that companies with interest payment and penalties on outstanding taxes due between 2015 and 2018 would have them cancelled and the underlying tax due could be paid in instalments.

In addition, companies affected by the coronavirus pandemic would get relief for four months of income tax. The Ethiopian Government would also grant a one-month grace period on payment of value-added and turnover tax payments.

The television station announced that companies that paid their taxes in lump sums would receive 10% discounts, and those that were donating to the COVID-19 response fund would get 20% discount.

In all, whether the Nigerian government would emulate the Ethiopian government, no one can tell but it is generally believed that companies, especially the SMEs deserve tax relief to ease their burdens.

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