FG Grants Companies 7 Years Tax Holiday

Federal government, as a way of attracting investment into the telecom infrastructure business has announced a seven-year tax holiday to interested companies to be licensed soon.

Government made this policy statement Tuesday, in far away Doha, Qatar, where it is being represented by the Ministry of Communications Technology and the Nigerian Communications commission, NCC, at the ongoing ITU Telecoms World conference. 

Announcing the incentive, ‎Mr Joseph Tagbe, Principal Partner of KPMG, government consultants to the soon to be flag off licensing regime ‎said that licensed Infrastructure Companies (Infracos) in the broadband spectrum will, among other incentives, get tax holidays of between five and seven years to cushion their investments.

Tagbe announced this as one of the highlights of the Nigeria Investment meeting at the ongoing ITU World 2014 in Doha.

Corroborating Tagbe, Communications Technology Minister, Dr Omobola Johnson said it was part of Nigeria’s drive for more investors into the blossoming ICT sector.

She said the licensing regime was based on the Open Access Model and that beneficiaries of the licenses were getting tax holidays among other incentives, to encourage them invest and guarantee adequate returns on investments.

Tagbe also told the audience that the investors will be encouraged to veer into areas where many consider to be less commercially rewarding through subsidy, and grants may be given out to further their interest in such areas.

They will also be granted pioneer status as part of the incentives to boost their interest in investing in such areas or zones that may look unattractive.

Such Infracos will get such incentives that could be up to 30 per cent mark up on their capital expenditure (Capex) and employee tax holidays as well.

To qualify for these, Infracos will quantify their Capex and what it will take to rollout and how long it will take to break even.

Earlier, Executive Vice Chairman of the Nigerian Communications Commission (NCC) Dr Eugene Juwah, revealed to the public that Nigeria had achieved 96 per cent teledensity with over 134 million active subscribers, and ICT contribution to national GDP of over 10 per cent.

He said that although over $32bn had been invested in this area so far, there is still a yawning gap in broadband penetration which stands at only six per cent at the moment. “75 million people connect to the Internet on narrow band.

He encouraged would be investors to take advantage of this gap because apart from government and high networth individuals who desire these services for high data transmission, the banks, education sector and electronic commerce operators need broadband to carry out their heavy data too.