In a Twitter thread the Minister of Finance, Hajia Zainab Shamsuna has explained the importance and scope of the Finance Bill signed into law by President Muhammadu Buhari on Monday.
The new law ambitiously seeks to redress tax inequalities and provide government it’s needed revenue for infrastructure.
Read the Minister’s Twitter Thread:
The Finance Bill signed into law by H.E. Muhammadu Buhari on Monday; has strategic objectives that recognise the crucial relationship between fiscal policy, the regulatory environment and the strong capital market we all seek to effect in Nigeria.
We planned that from now on, the annual budget will always be accompanied by finance bills to enable the realisation of revenue projections; this supports a stronger implementation process.
The Finance Act, 2019 has offered incremental but necessary amendments to certain provisions of existing tax laws, including the following:
Companies Income Tax Act (CITA), 2004;
Personal Income Tax Act (PITA), 2007;
Value Added Tax Act (VATA), 2007;
Petroleum Profits Tax Act (PPTA);
Stamp Duties Act (SDA), 2007;
Customs and Excise Tariff Act, 2004; and
Capital Gains Tax Act, 2007.
Also contained in the bill was the amendment of excess dividend tax rules that result in double taxation and this discourages investments; Review of commencement and cessation business rules that also lead to double taxation.
An incentive of 2% bonus for early tax payment by medium-sized companies & 1% for large companies; An increase in VAT rate; Moderation of inefficient and ineffective tax incentives; closing loopholes in existing tax laws that allow tax avoidance resulting in tax revenue leakages.
It is important to know that the Finance bill has also taken care of essential palliatives to support MSMEs and mitigate the impact of the VAT rate increase on the most vulnerable businesses, communities and citizens in the Nigerian economy.
Some of these measures include: Expanding the list of VAT-exempt items (e.g. basic food items, educational materials and medical supplies); Introducing a VAT registration threshold for MSMEs with a turnover of less than N25 million per annum;
Reducing the corporate tax rate for MSMEs from 30 percent to 20 percent for Small firms (with turnover of between N25million and N100million per annum.); and exempting micro-firms (with turnover of less than N25million per annum).