COVID-19: States to get $2.5m World Bank grant if they give tax relief

The World Bank will reward states with $2.5 million each in performance-based grants if they implement, by September 30, tax relief programmes for individuals and business owners as part of efforts to mitigate the impact of the COVID-19 pandemic.

The decision was disclosed in a statement signed by Abdulrazaque Bello-Barkindo, head, media and public affairs, Nigeria Governors Forum (NGF).

The tax relief programmes include: extension of filing and payment dates; tax moratoriums; waivers or reduction of penalties, and interests over the extension period.

According to Bello-Barkindo, the decision was made during a virtual meeting held on August 14 under the states’ fiscal transparency, accountability and sustainability (SFTAS) programme for results, jointly organised by the World Bank and NGF, in conjunction with the federal ministry of finance, budget and national planning.

“The 36 states of the federation are introducing tax relief programmes to mitigate the unending toll of the COVID-19 pandemic on businesses and individual taxpayers and ensure the speedy recovery of state economies,” the statement read.

“State governments are themselves currently experiencing a liquidity crisis of their own; and with limited capacity to borrow, it has become imperative that they find a balance between granting tax reliefs and maintaining revenues at a sustainable level.

“The extent to which government revenues will be impacted by these reliefs will depend on the type of relief that they grant and their ability to raise their tax efforts simultaneously, including offering incentives for greater tax compliance.

“These efforts are being incentivised by a new Disbursement Linked Indicator (DLI) under the Federal Ministry of Finance Budget and National Planning (FMFBNP) World Bank $750 million States Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for Results.

“Eligible States will be rewarded with USD2.5 million each in performance-based grants if they announce by 31st July, 2020 and implement by ‪30th September, 2020, a tax compliance relief programme for individual taxpayers and businesses to mitigate the COVID-19 impact.”

Each state is, however, expected to meet some criteria before it can receive the $2.5 million grant, one of which is the announcement by the commissioner for finance or the executive chairperson of the state internal revenue service, which will be published on state’s website and in national dailies to ensure widespread awareness amongst taxpayers.

Also, tax officials and collecting agents will be issued guidelines by the states for the implementation of the reliefs to ensure consistent execution.