Introduction
As a reputable accounting firm in Nigeria, we recognize the vital role that agriculture and agribusiness play in driving economic growth and development in the country. The Nigeria Finance Act 2019 introduced significant tax relief measures to support and promote the agriculture sector. In this article, we explore the key provisions of the Nigeria Finance Act 2019 that offer tax benefits and incentives for agriculture and agribusiness.
Overview of the Nigeria Finance Act 2019
The Nigeria Finance Act 2019, signed into law on January 13, 2020, aims to address fiscal challenges, stimulate economic growth, and enhance revenue generation for the government. The Act introduces various tax reforms, including measures that specifically benefit the agriculture sector, which is a critical component of Nigeria’s economy.
Tax Relief Measures for Agriculture and Agribusiness
- Pioneer Status Incentive: The Nigeria Finance Act 2019 grants pioneer status to agribusinesses engaged in the processing of agricultural produce. Companies with pioneer status are eligible for tax holidays for an initial period of three years, renewable for an additional two years. This incentive encourages investment in agro-processing industries, promoting value addition and job creation in the sector.
- Extension of Pioneer Status to Agriculture Equipment: The Act extends the pioneer status incentive to cover agricultural equipment, machinery, and tractors. This move encourages the acquisition of modern and efficient agricultural equipment, which can significantly enhance productivity in the agricultural value chain.
- Extension of Capital Allowances: The Finance Act 2019 extends the list of qualifying capital expenditure for agribusiness to include agricultural plant, equipment, and buildings used for agricultural purposes. This extension allows agribusinesses to claim capital allowances on a broader range of investments, reducing their overall tax burden.
- Agricultural Investment Allowance: The Act introduces an Agricultural Investment Allowance, which allows agribusinesses to deduct 20% of the cost of qualifying agricultural investments from their assessable profits. This measure encourages capital investment in the agriculture sector, supporting expansion and modernization efforts.
- Tax Exemption for Agricultural Bonds: The Nigeria Finance Act 2019 exempts income from government-issued agricultural bonds from Companies Income Tax (CIT). This exemption aims to encourage investment in government-backed agricultural projects and initiatives.
Benefits and Implications
The tax relief measures introduced by the Nigeria Finance Act 2019 have several benefits for the agriculture and agribusiness sector:
- Promotion of Agribusiness Investments: The pioneer status incentive and agricultural investment allowance encourage domestic and foreign investments in agribusiness, leading to increased productivity and value addition.
- Enhanced Modernization: Extension of pioneer status to agricultural equipment and capital allowances on agricultural investments incentivize the adoption of modern and efficient farming practices, driving agricultural modernization.
- Job Creation: Increased investments in agribusiness and value addition can create employment opportunities along the agricultural value chain, contributing to poverty reduction and economic development.
- Improved Food Security: The promotion of agribusiness investments and modernization can boost agricultural output, contributing to improved food security in Nigeria.
Conclusion
The Nigeria Finance Act 2019’s tax relief measures for agriculture and agribusiness demonstrate the government’s commitment to supporting the growth and development of this critical sector. By providing tax incentives for investments, modernization, and value addition, the Act aims to boost agricultural productivity, create employment opportunities, and enhance food security in Nigeria.
At [Your Accounting Firm], we are dedicated to assisting businesses in the agriculture sector to leverage these tax relief measures. Our expert team can provide personalized tax planning and advisory services, enabling you to maximize the benefits of the Nigeria Finance Act 2019 while contributing to the growth and sustainability of agriculture and agribusiness in Nigeria.
Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Readers are advised to consult with professional advisors to understand how the Nigeria Finance Act 2019 specifically impacts their agriculture and agribusiness operations.
For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at www.sunmoladavid.com. You can also reach us via WhatsApp at+2348038460036.
