The new Finance Bill recently signed into law would drive the government’s fiscal responsibilities this year and subsequent years.
Speaking at an interactive breakfast forum organised by Pedabo in Lagos, Albert Folorunsho, Partner at Pedabo, highlighted some new changes to the Finance Bill and how this would impact businesses and individuals.
According to Folorunsho, the new Act made changes to the Companies Income Tax (CIT) 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.
Under the Companies Income Tax (CIT) Act insurance companies would be able to carry forward losses indefinitely as opposed to the 4-year restriction currently in place, also, Life and non-life businesses would no longer be liable to special minimum tax provision and all wholly, exclusively, reasonably and necessarily incurred expenses will be tax-deductible, the law also removes the double taxation caused by excess dividend tax (EDT) thereby encouraging corporate savings and retention of profits.
In a bid to boost government’s shrinking revenue, the new Act increased Value Added Tax rate to 7.5percent from the current 5percent. Henceforth, banks are to request for Tax Identification Number (TIN) before opening business bank accounts for individuals, while existing account holders must provide their TIN to continue operating their accounts.
Under the Petroleum Profits Tax Act, the new law repealed the provision of PPTA that exempts dividends paid out of profits derived from petroleum operations from withholding tax. Taxpayers in this space would now be saddled with the responsibility of withholding tax when paying dividends.
The new Act increases the stamp duty on receipts to ₦50 on every transaction from ₦10,000 and above; and expands the definition of receipt to cover electronic transactions.
In his address at the event, Muhammad Nani, chairman, federal inland revenue service, FIRS represented by Gabriel Ogunjemilusi, a deputy director in FIRS, said the N8trn revenue target in the 2020 budget is feasible, noting that guidelines for the full implementation of the newly signed Finance Bill would be ready by February.
According to Ogunjemilusi, in implementing the new VAT rate, the commencement rule would apply.
“that is the new VAT rate of 7.5 percent would be effective at the point of invoicing and not the date of order or transaction,” he said
Ogunjemilusi further said the Finance Bill would be an annual ritual that would accompany the appropriation bill. Noting that any inadequacies noted would be improved on.
Also speaking at the even Ganiyu Musa, managing director, Cornerstone Insurance plc said the new Finance Bill would remove impediments on the operations of Insurance companies in the country.
Pedabo is an independent member firm of Morison Ksi Providing Audit Assurance, Tax consulting and Advisory to clients in all sectors of the Nigerian economy.
