Understanding and Adapting to the Industrial Training Fund (Amendment) Act 2011.

The Industrial Training Fund Act (ITFA) became effective on October 8, 1971. Its purpose was to establish the Industrial Training Fund (ITF) to promote and encourage skill acquisition in Nigerian industry or commerce. This aimed to create a pool of trained indigenous manpower to meet the economy’s needs. The Act mandated the Council to provide or secure training, approve courses, consider special employment cases, and conduct or assist research in training matters. Employers were required to provide adequate training, with evidence forwarded to the ITF for refunds. Over four decades later, the ITFA struggled to make an impact due to implementation issues. Recent amendments, enacted by the Industrial Training Fund (Amendment) Act 2011, signed on June 3, 2011, and gazetted on June 22, 2011, aimed to address these challenges. Changes include empowering the ITF to appoint agents for audit and compliance enforcement. The threshold for employer liability reduced from 25 employees to a minimum of 5 employees or a turnover of N50 million and above per annum. Employers now contribute 1% of payroll by prescribed dates. The amendment requires entities bidding for government or private business to prove compliance. Regulatory agencies must ensure compliance, and free trade zone entities need proof for expatriate quota approval. The Minister of Industry, with Federal Executive Council approval, can vary contribution rates. The maximum refund for employers decreased from 60% to 50%. Penalties for non-compliance increased, with the power to waive penalties now vested in the Director-General of the Fund. The punitive section imposing a 5% monthly penalty on outstanding contributions was not amended, and the law’s late gazetting raises concerns about retrospective application including employers with 5 employees burdens micro-businesses. The N50 million annual turnover threshold may hinder the Fund’s training objective for shell companies with few employees but substantial income. Guidelines for refund claims, including a 2-week advance notice of training, are cumbersome, reducing benefits for employers. Overall, the amendments lead to increased costs for employers with diminished returns. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.