Free Trade Zones

Commerce Minister clarifies N7.9trn capital cost allowance certificates

Jhe Minister of Industry, Trade and Investment, Otumba Niyi Adebayo, has pleaded with the House of Representatives Public Accounts Committee to give him more time to meet with his officials on issues concerning certificates of depreciation granted to companies between 2017 and 2021.

He made the plea when he appeared before the committee during the resumed investigative hearing into the alleged loss of revenue in free trade zones.

It should be remembered that the committee had summoned the Minister on the basis of a request for verification from the Office of the Auditor General of the Federation.

The query related to 4,672 capital cost allowance certificates worth around 7.9 trillion naira issued to 2,203 companies between January 2017 and December 2021.

Documents presented to the committee also revealed that the ministry recorded what it described as the rejection of N101.6 billion.

According to the documents, denials are findings after an audit that a business or individual taxpayer was not entitled to a deduction or other tax benefit claimed on a tax return.

On the other hand, capital cost allowance is the practice of allowing a taxpayer to obtain tax relief on capital expenditures by allowing it to be deducted from their annual taxable income.

“It is akin to a tax deductible expense and is available for qualifying capital expenditure incurred in the supply of certain assets used for the purposes of a trade or rental services and effectively allows a taxpayer to write off the cost of an asset over a period of time”.

In his presentation, the Minister of Industry, Trade and Investment, Otumba Niyi Adebayo, said the issues had just been brought to his attention during the hearing.

He told the committee he would need time to sit down with ministry officials, including the permanent secretary, and prepare a fuller response to questions.

The minister called on the commission not to disclose the figures involved in capital endowment issues in the public domain.

According to him, disclosing the figures will lead Nigerians to form an opinion that does not accurately reflect the issue at hand.

For his part, the chairman of the commission, Wole Oke (PDP, Osun) told the minister that before the advent of the finance law, only the permanent secretaries were invited to answer these questions.

He said that with the entry into force of the 2020 finance law, the invitation is now extended to ministers.