By Ikechukwu Okaforadi
The Federal Inland Revenue Service (FIRS) and the Institute of Chartered Accountants of Nigeria (ICAN) yesterday disagreed over Senate’s move to alter the Company Income Tax Act (CITA), which seeks to increase pioneer status to new companies in Nigeria from five to 10 years.
While FIRS opposed the proposal, ICAN supported it.
The two institutions voiced out their disagreements on the proposal at a public hearing on the Company Income Tax Act (CITA) organised by the Senate Committee on Finance.
In his own submission, the Chairman of FIRS, Babatunde Fowler, approved the current provision in CITA, which gives five year tax holidays to new industries.
The tax collecting agency argued that giving further incentive to companies would lead to loss of revenues to the nation’s coffers.
Using the telecommunications industry to buttress his argument, Fowler submitted that five-year is ‘more than sufficient’ for investors to recoup their profit.
According to the FIRS boss, most investors hardly invest in areas where they can’t make profit within five years of investment.
But the Institute of Chartered Accountants of Nigeria (ICAN) differed, adding that this would encourage entrepreneurs and existing companies to expand their operations.
The Institute, however, recommended that the proposal should also include existing companies going into a line of business where infrastructures are not provided by the government.
ICAN President, Mallam Isma’ila Zakari said: “This is a welcome development that will encourage entrepreneurs to invest and expand their operations. “
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