Finance Bill: FG to exempt incomes in convertible currencies from tax

The Federal government on Thursday revealed that it will exempt incomes in convertible currencies from taxation under its pillar of tax, in the proposed Finance Bill 2022.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, while presenting updates on the proposed Finance Bill 2022, at the National Economic Council (NEC) meeting presided over by Vice President Yemi Osinbajo, on Thursday, also revealed the new Bill, also has provisions for “tax deductions for research and development, investment tax vredits; reconstruction investment allowance; rural investment allowance; among others Incentives, under its pillar of tax”

The proposed Finance Bill 2022 received NEC approvals, after additional inputs from the State Governors, as the bill goes ahead to the Federal Executive Council( FEC) for necessary approval before finally going to the National Assembly.

Members of the Council were briefed on the main features of the bill by the Finance Minister, who unveiled the five fundamental policy drivers in the proposed Finance Bill 2022.

The Minister listed the drivers to Tax Equity, Climate Change; Job Creation / Economic Growth; Tax Incentives Reform and Revenue Generation / Tax Administration

She added that the bill seeks to amend relevant taxes, excises and duty statutes in line with the macroeconomic policy reforms of the Federal Government and to amend and make further provisions in specific laws in connection with the public financial management of the Federation.

Other aspects of the Finance Bill include: Chargeable Assets; exclusion of Losses and Replacement of Business Assets.

“ Under the Tax Equity pillar, all sectors of the economy would be brought into the tax net including Capital Gains Tax from digital assets, Cable Undertakings, Lottery and Gaming Business”

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Similarly, under the Climate Change and Green Growth pillar of the bill, there would be incentives for the natural gas sector and discouragement of gas flaring.

Also, the bill contains an amendment under Chargeable Assets stating that, “subject to any exceptions provided by this Act, all forms of property shall be assets for the purposes of this Act, whether situated in Nigeria or not, including Options, debts, digital assets and incorporeal property generally.”

According to the bill, these provisions clarify the basis for the taxation of Cryptocurrency and other Digital Assets in line with the Government’s policy thrust of enhancing the cross-border and international taxation of growing e-commerce with emerging markets.

By doing so, Nigeria will join the league of jurisdictions currently taxing digital assets, including the United Kingdom, the United States of America, Australia, India, Kenya and South Africa.

The Minister further noted that extensive consultations have been done on aspects of the bill such as tax avoidance and tax evasion by introducing a general anti-avoidance route.

She disclosed that in coming up with the bill, the Ministry of Finance engaged a wide range of stakeholders and elicited enough feedback especially through the work of a technical committee co-chaired by Special Adviser on Economic Matters to the President, Adeyemi Dipeolu and Special Adviser on Finance, Sarah Alade.

Some of the Governors who commented on the bill, including the Governors of Sokoto, Borno, Kaduna, Kebbi, Ogun, pointed out areas requiring additional inputs.

It was therefore resolved that State Governors should make additional inputs just as the proposed bill is being sent forward for consideration to the Federal Executive Council before the President sends it to the National Assembly.

At the meeting, the newly sworn-in Osun State Governor, Ademola Adeleke, was also formally welcomed to the Council by the Vice President and other members.

NEC, which is chaired by the Vice President, comprises 36 governors and the Central Bank Governor.

The Council meetings are also attended by some members of the Federal Executive Council.