Tag: Finance Bill

Senate passes finance bill two weeks after transmission

Senate on Tuesday at plenary passed the Finance Bill 2021, transmitted to the National Assembly by President Muhammadu Buhari, on Dec 7.

The passage of the bill followed consideration of a report by the Joint Committee on Finance; Customs, Excise and Tariff; Trade and Investment.

Presenting the report, the Chairman of the Joint Committee, Sen. Solomon Adeola (APC-Lagos), said the bill seeks to support implementation of the 2022 Federal Budget of Economic Growth and Sustainability by proposing key specific taxation, customs, excise, fiscal and other relevant laws.

According to him, a total of 12 Acts were amended under the finance bill which contains 39 clauses.

He said the bill seeks to promote fiscal equity, align domestic tax laws with global best practices, introduce tax incentives for infrastructure and capital markets, support small businesses and promote increase government revenue.

“The Finance Act 2020 was predicated essentially on having no new taxes and no new incentives due to the COVID-19’s impact on the economy as such it was structured across four broad thematic areas.

“Enacting counter cyclical measures and crisis intervention initiatives; Tax, fiscal responsibility, and public procurement reforms; Reforming fiscal incentives policies for job creation; Ensuring closer coordination of monetary, trade and fiscal policies; and Enhancing tax administration,” Adeola said.

According to the report, approved by the Senate, the Joint Committee, based on its observations, recommended that 5 per cent Capital Gains Tax be imposed on shares’ disposal transactions where gains exceed N250 million in 12 calendar months.

It recommended that Gaming and Lottery Companies, as well as Oil and Gas Companies be taxed.

It underscored the need for Midstream and Downstream Oil and Gas Companies to be made liable to corporate tax without the benefit of tax exemptions for firms exporting goods to earn foreign exchange.

The Committee observed that doing so would prevent Double-Dipping by Gas Utilization Companies such that they cannot claim both (1) 3-year Tax Holidays; as well as (2) Petroleum Profit Tax Act Incentives or (3) Pioneer tax Holidays under IDITRA.

It advocated for qualifying Capital Expenditure rules for small and pioneer Companies, to prevent double dipping by mandating that Companies cannot deduct qualifying Capital Expenditure.

This, it said, is to reduce their taxable profits where the relevant qualifying Capital Expenditure is used to generate tax – exempt income.

It sought more powers for the Federal Inland Revenue Service (FIRS) to collect NPTF levies on Nigerian Companies on behalf of the fund and to streamline tax levy collection from Nigerian Companies in line with President Buhari administration’s ease of doing business reforms.

The committee also emphasised the need for the Federal Government to ensure that FIRS deploys both proprietary and third-party technical applications to collect information from taxpayers, enhance confidentiality and non-disclosure and to enable them investigate tax evasion and other crimes and sanction non-compliant tax payers.

It further called for the FIRS to be empowered to assess Non-Resident Firms to tax on fair and reasonable turnover basis on Turnover earned from digital services to Nigerian customers, with a further mandate to appoint persons for the purpose of collection and remittance of non-resident taxes.

It demanded necessary reforms on securities lending transactions, minimum Tax for Insurance Companies and Companies in general, Taxation of Unit Trust Income, Real Estate Investment Trust, and Insurance Companies Capitalization by NAICOM in line with Tax Equity.

It urged the government to mandate FIRS as Principal Tax Revenue Collection Agency to collaborate with other law enforcement MDAs in streamlining Tax Collections by enhancing Public Financial Management reforms.

According to the report, doing so would reduce revenue leakages and better track actual expenditure to revenue performance in line with the provision of the Constitution of the Federal Republic of Nigeria 1999 (as Amended), Fiscal Rules and other Extant Money Acts.

It also called for the diversification of Nigeria’s revenue from Oil sector to other sectors to fund critical expenditures.

It demanded an increase of 0.5 per cent in educational tax, pushed for close monitoring of unfolding development and policies on VAT, Tax Incentives, Projected increase Tariff on Tobacco, Alcohol and Carbonated drinks to fund vital expenditure on Health, Education and Security, with a possibility of introduction of new taxes, tariffs and levies as the economy recovers.

Meanwhile, the Senate also passed a bill to amend the 2021 Appropriations Act.

The bill, sponsored by Senate Leader, Yahaya Abdullahi (APC-Kebbi), scaled through second and third readings after it was considered during plenary.

The 2021 Appropriations Act (Amendment) bill seeks to extend implementation of the Capital aspect of the Appropriation Act 2021 from December 31, 2021, to March 31, 2022.

December 21, 2021
JUST IN: Buhari Signs 2021 Budget, Finance Bill Into Law

President Muhammadu Buhari on Thursday signed the 2021 budget and the finance bill into law at the Council Chambers of the State House in Abuja.

This comes ten days after both chambers of the National Assembly passed the N13.5trn budget and three days after it was transmitted to the President for assent.

President Buhari presented the proposed 2021 budget to the National Assembly on October 8.

The National Assembly, while approving the proposal on December 21, raised the estimate of N13.082 trillion to N13.588 trillion.

This was an increase of N505 billion from the proposed figures presented by the Buhari administration.

The budget signing is to ensure a January to December budget calendar.

It is tagged the budget of economic recovery and resilience and, according to the president, is critical for the legacy of this administration in ensuring security, economic growth, and implementing health and emergency measures to counter the spread of the COVID-19 pandemic.

The president also promised that the budget will address the challenges caused by the pandemic on the economy.

On revenue generation, President Buhari warned heads of revenue-generating agencies to remit early and threatened sanctions for defaulters.

President Buhari on Thursday announced that specific borrowing plans will be forwarded to the national assembly soon.

After the signing ceremony, Channels Television questioned the Senate President, Ahmed Lawan, on the use of over N3 trillion to service debts and his thoughts on more loan requests from the president.

In response, the Senate President and the Speaker of the House of Representatives, Fem Gbahabiamila, both urged Nigerians to focus on what the loans are used for.

They both stated that borrowing is a natural option when revenue is low and assured Nigerians that the National Assembly will ensure all monies borrowed must be used for the capital projects they are slated for.

December 31, 2020
2020 Finance Bill to exempt minimum wage earners from tax – Buhari

President Muhammadu Buhari on Monday said his administration has set plans to exempt minimum wage earners from Personal Income Tax as a means of insulating the Nigerian masses against rising inflation.

The President made these disclosures in his speech delivered virtually by Vice President Yemi Osinbajo, SAN, on Monday at the opening session of the 26th Nigerian Economic Summit Group Conference themed: “Building Partnerships for Resilience”.

The President said this is one of the proposals in the 2020 Finance Bill, adding that it would help in stimulating the economy, along with other plans proposed or already being implemented.

When coupled with other items in the proposed Bill, and various economic policies of the Federal Government, these incentives would ensure the resilience of the Nigerian economy to exogenous shocks, according to President Muhammadu Buhari.

According to a statement issued by Senior Special Assistant to the President on Media and Publicity, Office of the Vice President, Mr. Laolu Akande, Buhari said “we are proposing in the new Finance Act that those who earn minimum wage should be exempted from paying income tax.

“These provisions which complement the tax breaks given to small businesses last year will not only further stimulate the economy, but are also a fulfilment of promises made to take steps to help reduce the cost of transportation and the impact of inflation on ordinary Nigerians.”

Explaining the role of the private sector in building a resilient economy, President Buhari said “this government has always emphasized that the private sector has a key role to play in our efforts to build a more resilient and competitive economy as expressed in the Economic Recovery and Growth Plan.

“Private companies in design, construction, logistics and finance are very much engaged in our infrastructural projects in power and rail as well as road and bridges and the installation of broadband infrastructure which is an essential requirement if Nigeria is to participate actively and benefit from the 4th Industrial Revolution.”

Continuing, the President added, “…it is clear that we must diversify the economy away from dependence on crude oil exports, speed up human capital development and improve on infrastructure. Above all, our economy must be made more resilient to exogenous shocks. It is important for the private sector to play a key role as we work together to identify national priorities and try to influence our future national trajectory.”

The President also gave insights to the collaboration between the CBN, the Nigerian Sovereign Wealth Investment Authority (NSIA) and other stakeholders in the creation of an Infrastructure Company (Infraco) Fund to address some of the nation’s critical infrastructure needs.

“It goes without saying that partnerships remain essential to attract the resources for building a solid national infrastructural base. I am pleased to inform you in this regard that we are working actively with the Central Bank, Nigerian Sovereign Investment Authority and state governments under the auspices of the National Economic Council to design and put in place a N15 trillion Infraco Fund which will be independently managed.

“The Infraco Fund will help to close the national infrastructural gap and provide a firm basis for increasing national economic productivity and growth,” the President explained.

Restating the commitment of his administration to sustaining collaborations with the private sector in addressing challenges, President Buhari said “if there is one single lesson to be learnt from the COVID-19 pandemic, it is that partnerships are essential for credible responses with lasting effects.”

His words: “Our national journey to economic prosperity is a long one, so we must all certainly work together. As we saw, partnerships were essential when we were faced with the serious challenge of combatting COVID-19.

“We saw the key role that partnerships played in our national effort to combat the COVID-19 crisis. While Federal and State Governments worked together to manage the health response and ensure the establishment of isolation centres and availability of test kits, personal protective equipment, and medicines, the private sector also played an active role as individual entities, and also worked together in groups like the Coalition Against COVID-19.”

During the speech presentation, the Vice President responded to the issue of import duties raised by some speakers at the summit. The Vice President noted that “the point of the reduction in levies on motor vehicles, commercial vehicles for transportation is to reduce the cost of transportation by reducing the cost of vehicles.”

He explained that “with subsidy removal and the increase in fuel price and the pass-through to food prices, transportation costs had to be reduced. Now the automotive policy is directed at localizing the production of vehicles. So the logic was increase the duty and levies so that local production becomes more competitive. But the annual demand for vehicles is about 720, 000 vehicles per year. Actual local production is 14,000 vehicles a year.

“So, the problem is that at current rate of production, we will not meet the serious national needs and this will just mean higher prices of vehicles and greater strain on other sectors of the economy that depend on transportation. But we are not giving up on the local auto industry.

“Two important things to note; the first is that we still have relatively high duty at 35%, so there is still a disincentive for importation. Second is that we are promoting policy that the government must buy only locally manufactured cars.”

The opening session of the summit featured presentations by speakers including Chairman of the Nigerian Governors Forum and Governor of Ekiti State, Mr Kayode Fayemi; Governor Aminu Bello Tambuwal of Sokoto State; Chief Executive Officer of MainOne, Ms Funke Opeke; and the Chief Executive Officer of GIG Group, Mr Chidi Ajaere; among others.

November 23, 2020
FG to slash 35% levy on imported cars to 5%

The federal government has revealed plans to slash the 35 per cent levy paid on imported cars to 5 per cent.

This is contained in the draft bill of the 2020 finance bill to be presented to the National Assembly (NASS).

The bill becomes law after it is passed by the legislature and assented by President Muhammadu Buhari.

Details of the bill shared by the presidency also show that the import duty of tractors and motor vehicles for the transportation of goods has been slashed from 35 percent to 10 percent.

The bill also grants tax relief to companies that donated to the COVID-19 relief fund under the private sector-led Coalition against COVID-19 (CACOVID).

To improve ease of doing business, the bill also proposes that software acquisition now qualifies as capital expenditure.

Zainab Ahmed, the minister of finance, budget, and national planning, had previously explained that the reduction in import duties and levies is targeted at reducing the cost of transportation.

“The reason for us is to reduce the cost of transportation which is a major driver of inflation especially food production,” she told state house correspondents at the end of the federal executive council (FEC) on Wednesday, November 18.

In 2019, Hameed Ali, the comptroller-general of the Nigeria Customs Service had urged the federal government to reduce the levy paid on imported cars to 10 percent.

At the time, Ali argued that the levy, which is paid in addition to the 35 percent import duty, has discouraged importers; causing them to divert their importation to neighbouring countries and heightened smuggling.

November 22, 2020
Finance Bill: What Nigerians stand to gain – Osinbajo

Vice-President Yemi Osinbajo on Saturday asserted that the Finance Act 2020 would stimulate the Nigerian economy and put the country on the path of geometric economic growth.

Osinbajo made the assertion at the Inspiration Conference 2020 of the Redeemer’s Men Fellowship (Lagos Regions) in Lagos.

The News Agency of Nigeria (NAN) reports that the conference had as its theme: “Galvanised for Geometric Growth”.

He said the bill, which was signed by President Muhammadu Buhari on Jan. 13, was aimed at shoring up revenue for all levels of government to meet up with their expenditure.

This, he said, was in addition to it supporting Small and Medium Enterprises (SME) in the country.

“The challenges of growing the economy border on creating an environment favourable to businesses and low revenue generation,” Osinbajo said.

He said that the 2020 budget of N10.6 trillion has a deficit of N2.2 trillion, “so it is clear that we are running a fairly large deficit”.

“The sources of revenue are oil proceeds and taxes, and most states do not generate enough revenue to meet their financial expectations,” Osinbajo said.

He cited Adamawa, Benue and Ekiti as some of the states with very low Internally Generated Revenue (IGR), too inadequate to cater for their expenditure.

The vice-president justified the increment of the Value Added Tax (VAT) from 5 per cent to 7.5 per cent, noting it to be very low when compared to other African countries.

“Ghana has 12.5 per cent; Cameroun has 19.25 per cent; Mexico with 16 per cent; South Africa at 15 per cent and Egypt at 14 per cent.

“To make things easier for the common man, we have exempted 16 classes of food items, tampons, sanitary towels, and tuition fees from nursery to tertiary.

“Also, before the Finance Act, many companies operating in the country without physical presence escaped taxation.

“Most digital companies made significant revenue from e-commerce, online advertising and the likes, but were not taxed.

“But now, once you have significant economic presence in Nigeria, but reside anywhere around the world, you are eligible to pay tax,” he said.

Osinbajo expressed confidence in the Nigerian economy, maintaining that the government would continue to provide the enabling environment for businesses to thrive.

He explained that in spite of the perceived low growth rate, the Nigerian economy was still relatively bigger when compared with other African economies.

“Rwanda has a Gross Domestic Product (GDP) of $8.7 billion, while FCT, Akwa Ibom, Lagos, Rivers and Delta have growth rates of $29.9billion, $14 billion, $90 billion, $14.2 billion and $11.2 billion respectively.

“Even Ghana is at $65.5 billion and is less than Lagos,” he said.

He stated that the potential of the Nigerian economy has been boosted by agriculture, manufacturing, creative industry, technology and ICT.

“Today, we produce an estimated 7.3 million metric tonnes of rice compared to 5 million metric tonnes in 2015.

“Today, people are using technology to attract investments in agriculture through crowd funding.

“There are incredible new ways of investing in agriculture in Nigeria, where companies are raising funds for farmers and farming, and such platforms should be invested on,” he said.

Osinbajo also called for more collaboration between the government and the private sector to bridge the infrastructural deficit.

“The Nigerian Liquefied Natural Gas Company (NLNG) and Dangote Group have already keyed into this, while 10 other companies have applied to execute 19 road projects of about 800km,” he said.

January 25, 2020
List of Items Exempted from VAT in New Finance Bill

On Monday, President Muhammadu Buhari signed the Finance Bill 2019 into law, approving the 50 percent in the value added tax (VAT) from 5 percent to 7.5 percent.

On Tuesday, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, released a statement through her media aide, Mr Yunusa Tanko Abdullahi, listing some items exempted from VAT under the new law.

She listed these commodities as basic food items (agro and aqua based staple foods) such as additives, cereals, cooking oils, culinary herbs, fish of all kinds (other than ornamented), flour and starch, fruits, live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, and water; locally manufactured sanitary towels, tuition (primary, secondary and tertiary education); and services rendered by microfinance banks.

The Minister described the Finance Bill as a peoples bill “considering the expansion of VAT exemption list,” noting that “a large sum of money realised from the taxation would rather go to the people; the states and the Local Governments Areas (LGAs) are to get 50 percent and 35 percent respectively while only 15 percent will go to the federal government.”

Mrs Ahmed also said the finance act has “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 economy.”

According to her, to make life better for small business owners, government introduced “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 N25 million and N100 million per annum.); and exempting micro-firms (with turnover of less than N25 million per annum).”

The Minister commended President Muhammadu Buhari for ensuring that “the strategic objectives in the finance bill recognise the crucial relationship between fiscal policy, the regulatory environment and the strong capital market we all seek to effect in Nigeria.”

January 16, 2020
Buhari signs Finance Bill 2019, praises 9th Assembly

President Muhammadu Buhari has signed into Law the Finance Bill, 2019.

President Buhari made the announcement via his Twitter handle @MBuhari on Monday.

The President noted that the Bill was vital to the implementation of the 2020 Budget.

The tweet read, “I am pleased to announce that this morning I signed into Law the Finance Bill, 2019.

“We introduced the Bill alongside the 2020 Budget, to reform Nigeria’s tax laws to align with global best practices; support MSMEs in line with our Ease of Doing Business Reforms; -Incentivize investments in infrastructure and capital markets; and raise Government revenues.

“This is the first time, since the return of democracy in 1999, that a Federal Budget is being accompanied by passage of a Finance Bill specially designed to support its implementation, and to create a truly enabling environment for business and investment by the private sector.

“I thank the leadership and members of the Ninth National Assembly for the hard work and support that have gone into the passage of the landmark Deep Offshore and Inland Basin PSC Amendment Bill, and the Finance Bill; both vital to the successful implementation of the 2020 Budget.”

January 13, 2020