With the growing uncertainties surrounding the price of crude oil, it is critical for the Federal Government of Nigeria (the “FGN”) to intensify its efforts towards the diversification of the Nigerian economy. One of such ways by with the FGN is setting out to achieve its economic diversification objective, is by tapping into the huge potential of the Nigerian mining sector.
Given the previous state of the mining sector, which was largely neglected, and generally lacked investments, it became important for the FGN to introduce policies and regulations aimed at revamping the sector and stimulating investors’ interests. The use of incentives is globally recognized as a beneficial tool in courting and sustaining investors’ interests in any sector of an economy, particularly in developing economies. The case is not different with Nigeria as laws have been enacted that contain incentives to encourage investments in the Nigerian mining sector.
A few of these incentives are highlighted below:
a. Accelerated capital allowances;
b. A tax relief period of 3 years and a further extension of up to 2 years;
c. Exemption from payment of custom/import duties in respect of plant and machinery imported specifically and exclusively for mining operations;
d. Mining companies may benefit from a waiver of applicable royalties – between 3%-5%, depending on the nature of minerals being mined;
e. Lower tax rate of 20% payable by mining companies for the first 5 years of commencement of business, where turnover is less than N1 million; and
Given the above incentives and other investor-friendly policies that have been put in place by the FGN towards improving the contribution of the Nigerian mining sector to the Nigerian economy, foreign and domestic investors are encouraged to take maximum advantage of the massive potentials of the Nigerian mining sector.
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