The implementation of the new Nigerian Police Trust Fund, which imposes a levy of 0.005 per cent of the net profit of companies operating business in Nigeria, would raise concerns over the stability of the tax regime in the country, PwC has stated.
The firm noted that though the 0.005 per cent rate on net profits of companies may insignificant, it would, however, place additional burden on corporate taxpayers.
“Although funding of the police and improving security is a priority issue, it could be funded through more allocations from already existing revenue streams. Introducing earmarked taxes could create concerns around the stability of the tax regime in Nigeria, PwC maintained.
The Nigerian Police Trust Fund Act was passed by the National Assembly in April 2019, and signed into law by the President on 2 July 2019, with the using the proceeds from it to train police personnel and procure security machinery and equipment.
The Fund will be wound up 6 years after its establishment. The assets and liabilities will be transferred to the Nigeria Police Force.
“Since it is imposed on companies ‘operating business’ in Nigeria, it is likely to also apply to permanent establishments of foreign companies.