"Whilst we expect the new guidelines to address a lot of the abuse and practical challenges that led to suspension of the erstwhile Scheme, all eyes must now be set on ensuring that challenges arising from implementation of the new guidelines are properly addressed."
The Federal Government of Nigeria (FGN), vide the Nigerian Export Promotion Council (NEPC), recently issued the revised guidelines for operation of the Export Expansion Grant scheme (hereinafter referred to as "EEG" or "the Scheme"). This move follows the decision of the FGN to reintroduce the Scheme, which had been suspended since 2013.
The EEG was originally introduced by the FGN in 1999 pursuant to the Export (Incentives and Miscellaneous Provisions) Act of 1992.
The FGN's objective for introducing the EEG was to stimulate export-oriented activities in the non-oil sector and curtail a growing gravitation towards a mono economy.
Fast forward to 2017, FGN is of the view that the objectives of the EEG are still relevant, more so at a time when diversification is touted as the only way to build a sustainable economy. The effective date of the revised guidelines is 1 January 2017, albeit, exports made between the time the scheme was suspended and its reintroduction are covered under the new guidelines.
Highlights of the revised guidelines are as follows:
An intending beneficiary of the EEG must be registered with the Corporate Affairs Commission and NEPC (i.e. as an exporter), and must be a manufacturer or merchant of products of Nigerian origin.
Furthermore, an intending beneficiary must have carried out a formal export (with proceeds repatriated to Nigeria within 300 days from the date of export) and submitted baseline data (i.e. relevant completed forms, audited financial statements etc.) for the relevant period. The baseline data is used in determining the incentive rate for the beneficiary's exports in a given year, and ultimately, the quantum of incentives enjoyed by the beneficiary.
Beneficiaries are also required to present an Export Expansion Plan as a prerequisite for participating in the Scheme. This would be a basis for determining continued eligibility.
2. The incentive
Beneficiaries of the EEG would be entitled to an export credit certificate (ECC). The ECC is similar to the defunct negotiable duty credit certificate (NDCC) which was granted to beneficiaries and used as a negotiable tax credit. However, unlike the NDCC which was transferable from trader to trader without restrictions on title and tenure, the ECC is only valid for two years after issuance and transferrable only once within this period.
The ECC may be used for the following:
- Settlement of FGN taxes e.g. companies income tax, value added tax etc.
- Purchase of FGN bonds
- Settlement of credit facilities by the Bank of Industry, Nigeria Export-Import Bank and Central Bank of Nigeria (CBN) intervention facilities
- Settlement of liabilities owed to the Asset Management Company of Nigeria
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