Nigeria: Credits resumed for export expansion grants

Nigeria: Credits resumed for export expansion grants

Following the announcement in the president’s 2017 budget speech that it was, resuming the “export expansion grant” scheme, the federal government of Nigeria issued an official circular in March 2017 to all eligible exporters.

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The export expansion grant is designed to be administered as tax credits. 

Exporters must submit their baseline data for 2013-2016 by 27 April 2017 to the executive director/CEO of the Nigerian export promotion council to determine their export expansion grant rates for 2014-2017 non-oil exports, respectively. The submissions are to include duly completed baseline forms, audited financial statements, and a five-year export expansion plan.

The Minister of Industry, Trade, and Investment has also indicated that certificates issued under the export expansion grant scheme, called export credit certificates, will replace the previous negotiable duty credit certificates.

Background

The export expansion grant was introduced to accelerate export volume and enable exporters to diversify their export products and market coverage. The negotiable duty credit certificates were used to pay for import and excise duties, and could be sold for cash. The program was suspended in 2013 due to perceived abuse by beneficiaries in claiming the grants.

KPMG observation

It is uncertain how the new tax credit-based scheme for offsetting taxes will be administered. Granting tax credits to exporters for payment taxes will not have immediate value for non-oil exporters who may not make tax payments. Additionally, the budget allocation for 2017 is a fraction of the amount of export expansion grant claims that have accumulated since 2013. Finally, the 30-day timeframe for submitting data and information is short given the work required. 

Although a positive indication of the government’s commitment to diversifying through non-oil export growth, the scheme’s success depends on its administrability for the government and beneficiaries. 

 

Read an April 2017 report [PDF 145 KB] prepared by the KPMG member firm in Nigeria: Resumption of the Export Expansion Grant Scheme: Administration and Challenges

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