With over 500, 000 infections confirmed and counting in countries all over the world, COVID-19 has been declared a global pandemic. To prevent further spread, governments across the world have imposed lockdowns forcing a slowdown of economic activities. With many countries’ economies already slowing before the pandemic, COVID-19 threatens to send many countries into recession.
In response to this crisis, governments all over the world have enacted emergency economic stimulus packages to counteract the disruption caused by the coronavirus. The US senate in a unanimous vote just passed the economic stimulus bill worth USD 2 Trillion. The governments of Canada and the United Kingdom have initiated similar legislation.
In Nigeria, the House of Representatives has passed the Emergency Economic Stimulus Bill 2020 (the Bill) proposing palliative measures to cushion the impact of the economic disruptions expected to be caused by the COVID-19 pandemic. Major provisions in the bill are examined below.
The Bill seeks to give temporary relief to companies and individuals by alleviating the adverse financial consequences of a slowdown in economic activities caused by the outbreak of Covid-19 in Nigeria while at the same time protecting the jobs of Nigerians who might otherwise become unemployed as a consequence of pandemic.
Some of the palliatives provided by the Emergency Economic Stimulus Bill are:
(a) 50% PAYE rebate –
Employers shall be entitled to a 50% income tax rebate on all pay-as-you-earn (PAYE) tax paid by the employer in respect of its employees. Employers shall be eligible to enjoy this incentive if the employer:
is duly registered under the Companies and Allied Matters Act; and
maintains same employee status without retrenching their staff from 1st March 2020 to 31st December 2020.
Employers partly or wholly taxed under the Petroleum Profit Tax Act are excluded from enjoying this incentive. The Bill grants the President the power to extend the duration of the PAYE rebate period while the COVID – 19 disease remains an urgent and severe public health emergency.
The Bill further provides that an employer of labour shall remain qualified to enjoy the stimulus plan even if there is a change in its staff strength if an employee dies from natural causes, leaves employment voluntarily, has indicated interest to leave the employment prior to 1st March 2020, or breaches the Labour Act.
(b) Deferral of Mortgage Payments under the National Housing Fund –
Payment of mortgage obligations on residential mortgages obtained by individual contributors to the National Housing Fund will be deferred for a period 180 days effective from 1st March 2020.
The Bill states that the President may seek an extension of the deferral period for a period not exceeding 180 days, which shall be granted by a majority vote of the National Assembly.
(c) Import Duty Waiver on Medicines and Medical Goods –
The Bill provides for the waiver of import duty on medical equipment, medicines, personal protection equipment, and such medical necessities as may be required for the treatment and management of the COVID – 19 Disease in Nigeria. The Minister of Health may issue regulations specifying goods that may be required for the treatment and management of the COVID – 19 virus in Nigeria.
The import duty waiver shall take effect from 1st March 2020 and remain in force until 31st December 2020.
The Bill states that the President may extend this waiver pursuant to his powers under the Customs, Excise Tariffs, etc (Consolidated) Act.
While this may not be as robust or grandiose as the American stimulus package worth USD 2 Trillion, it represents a commendable legislative step towards alleviating the negative economic effect of the COVID– 19 pandemic on Nigerian based businesses.
It is important to note that the Bill will not become law until it is passed by the Senate and assented to by the President.