The Senate on Thursday okayed the Finance Bill 2019 and approved the 7.5 percent Value Added Tax (VAT) proposed by President Muhammadu Buhari.
Buhari had proposed an increase of the Value Added Tax from 5 percent to 7.5 percent.
The VAT approval by the Senate followed adoption of the report on the Nigeria Finance Law and Tax Amendment Bill, 2019, otherwise known as Finance Bill.
But while the Senate approved the new VAT, some senators including Enyinnaya Abaribe, minority leader, and Ifeanyi Ubah, Gabriel Suswan and Abba Moro, however, raised objections to the bill.
They argued that the increment in taxes would further compound the suffering and pain of Nigerians.
Meanwhile, chairman of the committee, Olamilekan Adeola, while presenting the report, said the Bill specifically seeks to amend Nigeria’s tax provisions and make them more responsive to the tax policies of the Federal Government, among other things.
He added that the amendment and passage of the Finance Bill would enhance the implementation and effectiveness of government’s tax policies.
According to Adeola, the initiative to reform the tax system and the proposed modifications to the fiscal rules around taxation are clearly aimed at creating an enabling business environment aimed at minimising the tax burden for Micro, Small and Medium Enterprises (MSMEs).
The Acts amended in the Finance Bill are Companies Income Tax Act, Cap C21 2004 (as amended to date), Value Added Tax Act, Cap VI, LHN 2007 (as amended), and Customs and Excise Tariff (Consolidation) Act, Cap C49, 2004.
Others are Personal Income Tax Cap P8, LFN 2007 (as amended), Capital Gains Tax Act Cap C1, LFN 2007, Stamp Duties Act Cap S8, LFN 2004, and the Petroleum Profit Tax Act (PPTA) 2004.
Adeola further said the Finance Bill, as amended, would promote fiscal equity by mitigating instances of regressive taxation, as well as introduce tax incentives for investment in infrastructure and capital markets.
He said the bill seeks to amend the provision of the Companies Income Tax Act by curbing Base Erosion and Profit Shifting (BEPS) as proposed by the Organisation for Economic Cooperation and Development (OECD) and broaden the triggers for domestic taxation of income earned by non-resident companies in Nigeria through dependent agents and via online market platforms.
He further said the bill would address the taxation of industries, such as insurance, start-ups and the capital markets, deemed by the Federal Government as critical to the growth and development of the Nigerian economy.
After the clause-by-clause consideration, Senate President Ahmad Lawan said the bill’s passage by the Senate was intended “to ensure that we (National Assembly) streamline the tax system in Nigeria and get revenue for government to provide services and infrastructure to the citizens of this country”.
Solomon Ayado, Abuja
