The African Export-Import Bank (Afrexim Bank) has sounded a warning that the proposed 5% levy on companies earning over N100 million for community development projects may drive multinationals out of Nigeria. The bank’s report, “Monthly Developments in the African Macroeconomic Environment,” noted that the proposal is facing strong opposition from the private sector, with critics arguing that companies already pay 20-30% of their profits in corporate taxes.
The report states that the National Assembly’s consideration of the levy, despite opposition, may prompt international companies to leave the market. This could have far-reaching consequences for Nigeria’s economy, including a decline in foreign investment, a reduction in economic activity, and a loss of jobs.
The levy is part of the Corporate Social Responsibility Bill 2023, which aims to set high standards of corporate governance and ensure firms integrate long-term economic, environmental, and social aspects into their business strategies. However, the bill has faced rejection from the organized private sector, with the Manufacturers Association of Nigeria (MAN) describing the proposal as ill-timed and unnecessary.
MAN argued that CSR should be at the discretion of each organization, emphasizing that it is an internal matter. The association also expressed concerns about the current multiplicity of taxes and the high operating expenses that manufacturers are already struggling with.
Afrexim Bank’s warning highlights the potential risks of the proposed levy on Nigeria’s economy, particularly in terms of foreign investment and business confidence. The bank’s report noted that the proposal may undermine Nigeria’s efforts to attract foreign investment and promote economic growth.
The Nigerian government has been seeking to increase revenue through various means, including taxation. However, the proposed levy has raised concerns among businesses and investors, who argue that it may create an unfavourable business environment.
The fate of the proposed levy remains uncertain, as it is still being considered by the National Assembly. However, Afrexim Bank’s warning serves as a reminder of the potential risks of the proposal and the need for careful consideration of its impact on the economy.
