Provisions of the new Finance Bill in Nigeria

Provisions of the new Finance Bill in Nigeria

June 07, 2020

So many persons see the Finance Bill as a welcome change in Nigeria Tax regime because of some of the favourable additions to the bill. Although there is a debate that the Increase in Value Added Tax from 5% to 7.5% is inconvenient to the ordinary Nigerian.

The Finance bill having been signed into Law on the 13thof January, 2019 is now being referred to as the Finance Act, 2019.

Listed below is a summary of the provisions of the new law;

  1. Value Added Tax: The Value added Tax rate was increased from 5% to &7.5%. This means a 2.5% additional payment will be made on all transactions where VAT is charged. Basic commodities, education items and pharmaceutical items are exempted from VAT, while companies with a turnover of N25, 000, 000 (Twenty Five Million Naira) or below are exempted from filing VAT returns.
  2. Capital Gain Tax: Companies are exempted from Tax during re-organisation. Also compensation received from loss of employment which is up to N10, 000, 000 (Ten Million Naira) would be exempted from paying Captain Gains Tax.
  3. Personal Income Tax (PIT): Every existing bank account holder and new account holders must have a Tax Identification Number (TIN) to operate their accounts.
  4. Petroleum Profit Tax:The bill exempts payment of Withholding Tax (WHT) from dividends paid out of profits from petroleum operations.
  5. Company Income Tax (CIT):

i. The Law introduces the taxation of Non- residential companies (NRC) making money from the Nigerian economy.

ii. Small scale business that make less that generate less than N25, 000, 000 (Twenty Five Million Naira) in Annual turnover would be exempted from paying Company Income Tax.

iii. Medium scale Business that generate more than N25, 000, 000 (Twenty Five Million Naira) turnover annually but less than N100, 000, 000 (One Hundred Million Naira) in turnover annually will be required to pay 20% CIT as opposed to the initial 30%.

iv. Large companies with annual turnover of a N100, 000, 000 (One Hundred Million Naira) and above will be required to pay 30% of their profit as CIT.

  1. Custom and Excise Tariff: Taxes are also to be paid on imported goods.
  2. Stamp Duties. Electronic Stamping is now recognised as a form of stamping. There is now a compulsory payment of stamp duty of N50 on every transaction above N10, 000.

Finally, in order for the tax laws to be effective, the penalty for non-compliance of filing CIT has increased from N25, 000 (Twenty Five Thousand Naira) in the first defaulting month to N50, 000 and penalty for the subsequent months has increased from N5, 000 (Five Thousand Naira) to N25, 000 (Twenty Five Thousand Naira). Also, there are additional incentives for companies that remit their taxes on time.

 

 

 

 

The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advice from the particular facts and circumstances at issue from a lawyer. This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached.

More Articles

Search

Connect With Us

Got any questions?

If you are having any questions, please feel free to ask.

Send us an email

Frequently Asked

  • What additional documents do I require to file my Annual Returns?
  • Must my Company Secretary be a Lawyer?

    Although it’s ideal to have a lawyer as a company secretary, it is not compulsory for small private businesses.

  • What is a testimonium clause in an agreement?

    This is the part of the agreement where the witness attests to have witnessed the execution of the agreement.

  • What are the benefits of Registering with SON?
    1. Product traceability in the Nigerian market
    2. Detection of counterfeit products
    3. Barriers to the circulation of substandard goods
    4. The official SON Product Registration Logo and number are displayed on registered products.
  • What is personal data?

    This is any information that can be used to identify an identifiable human person such passport photograph.

  • Does a trademark search automatically reserve my trademark name?

    No, a trademark search does not automatically reserve that which is sought to be trademarked. A search ascertains whether that which is sought to be trademarked is available or violates any existing trademark.

  • What will happen if I buy the wrong category of forms with NAFDAC?

    Nothing, the purchased form will be in your account for future use.

     

  • What is share capital?

    The share capital in a private limited company is the amount of money invested by its owners in exchange for shares of ownership.

  • What is a trademark?

    A trademark can be any word, sign, symbol or graphic that you apply to your company, goods or services to distinguish them from those of your competitors; for example, a brand, product or company name, or logo. The trademark serves as a badge of origin for your business and its brands and products, and can consist of words, logos, slogans, colours and shapes, or a combination of all of these.

Call Us Now on +234 901 719 0079 Chat on WhatsApp