The Honourable Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, has lauded the attention, speed and commitment with which the National Assembly has considered the Finance Bill 2019 submitted by President Muhammadu Buhari .
The Finance Bill 2019, which has passed the second reading at the Senate, was presented to the Joint Session of the National Assembly precisely on 14 October 2019.
The President forwarded the Finance Bill 2019 for passage into law by the Senate pursuant to sections 58 and 59 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended).
The objectives of the Bill, as outlined by the President, are to strategically: “Promote fiscal equity by mitigating instances of regressive taxation; reform domestic tax laws to align with global best practices; introduce tax incentives for investments in infrastructure and capital markets; support small businesses in line with the ongoing Ease of Doing Business Reforms; and raise revenues for the Government by various fiscal measures, including a proposed increase in the rate of Value Added Tax (VAT) from 5% to 7.5%.”
Speaking recently with a team of media men in Abuja on the Draft Finance Bill, Ahmed stated: “Going forward, the annual budget will always be accompanied by finance bills to enable the realization of revenue projections.”
“Future finance bills will therefore also provide us with additional opportunities to incrementally improve the fiscal policy and regulatory/legal environment in order to further strengthen our domestic capital market, and ultimately ensure sustained and inclusive growth and development,” she stated further.
The Bill is to, among other things, amend the following tax provisions and make them more responsive to the tax reform policies of the Federal Government and enhance its implementation and effectiveness:
“Companies Income Tax Act, Cap. C2, Laws of the Federation of Nigeria, 2004 (as amended to date): The Bill seeks to amend the provision of the Companies Income Tax Act to, amongst other things, curb Base Erosion and Profit Shifting (BEPS) as proposed by the Organisation for Economic Cooperation and Development (OECD) and thereby broaden the triggers for domestic taxation of income earned by non-resident companies in Nigeria through dependent agents and via online market platforms.
The Bill also seeks to address the taxation of industries, such as insurance, start-ups, and the capital markets, evaluated by the Federal Government as critical to the growth and development of the Nigerian economy with a view to stimulating activities in those sectors and fostering overall economic growth.
Value Added Tax Act, Cap V, LFN 2007 (as amended): In line with global best practice, this Bill proposes to improve the efficiency of the Nigerian VAT system taking into considerations recommendations from various stakeholder groups. In addition to simplifying the VAT landscape, the Bill also seeks to expand VAT coverage by addressing some critical issues, such as taxation of the digital economy, VAT registration thresholds and intangibles.
Customs and Excise Tariff etc.(Consolidation), Cap C49, Laws of the Federation of Nigeria 2004: In a bid to create a level playing field for local manufacturers, this Bill wishes to subject certain imported goods to excise duties in similar manner as their locally manufactured counterparts.
Personal Income Tax Cap P8, LFN 2007 (as amended): The Bill also seeks to provide clarity and efficiency in the administration of individual income taxes in Nigeria.
Capital Gains Tax Act Cap C1, LFN 2007: The Bill also covers the taxation of business combination and seeks to prevent abuse of provision of the Act on group restructuring.
Stamp Duties Act Cap S8, LFN 2007: The Bill also seeks to increase revenue generation from duties on electronic stamps.
Petroleum Profit Tax: This Bill seeks to improve revenue by removing the tax exemption granted for dividends or income received from companies charged under Petroleum Profits Tax Act.
The Bill contains some changes to the Companies Income Tax Act, Value Added Tax (VAT) Act, Petroleum Profits Tax Act (PPTA), Personal Income Tax Act, Capital Gains Tax Act (CGTA), Customs and Excise Tariff Etc. (Consolidation) Act and Stamp Duties Act.”
In her words: “It is our hope that the Bill will be enacted by the National Assembly as soon as possible to support the implementation of the 2020 Appropriation Act. This is expected to encourage growth and investment by the sector of the economy.”
The initiative, which most Nigerians say is laudable, with the proposed modifications to the fiscal rules around taxation are clearly aimed at creating an enabling business environment and alleviating the tax burden for small and medium enterprises.