NECA holds meeting to chart way forward on the abuse of pioneer status

FEC Approves Revised National Tax Policy

The National Employers’ Consultative Association (NECA) recently invited its members to a meeting to discuss the recent investigative activities of the National Assembly on organised businesses in Nigeria and to take a position on a way forward in this regard.

Recall that the House of Representatives (HOR) had set up an ad-hoc committee (the Committee) to investigate perceived abuse of pioneer status tax incentive by companies operating in Nigeria (the Investigation). Please refer to our regulatory alert on this issue.

Following the House of Representative’s call for representation by the affected companies, NECA sent a letter through its lawyers reminding the Committee of a pending case with the Court of Appeal in which NECA challenged the scope and extent of the National Assembly’s powers to investigate companies based on Sections 88 and 89 of the 1999 Constitution. NECA further urged the National Assembly to stay action on the Investigation pending the pronouncement of the Court of Appeal.

However, the Committee proceeded with the hearing as originally scheduled in spite of NECA’s request and issued another public notice to affected companies, following poor attendance and representation by affected companies at the first hearing. In response, NECA instructed its external counsel to put in an appearance on behalf of its members.

At the meeting held with its members, NECA maintained its position and advised members to await the pronouncement of the Court of Appeal on the pending case and stay action on the investigative hearing.

It would be interesting to see how this plays out as outcome of the ongoing interaction between NECA and the HOR as well as the pending case with the Court of Appeal will go a long way to set the tone for what to expect in terms of tax enforcement and audits in the future.

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