Effect of the new Finance Act on VAT and Stamp Duty charges in Nigeria
The Finance Bill now the Finance Act 2019 has no doubt affected the VAT and stamp duty charges in Nigeria. By this new law, the Value Added Tax which was originally 5% has been increased to 7.5%. The stamp duty charges were also affected by this law, in that, the law expands the definition of receipt to cover electronic transactions. The implication of this on the stamp duty charges is that it broadens the application of stamp duties, as such; it has a potentially negative effect, and may encourage cash payments or customers making multiple transactions under N10k for products or services in order to avoid the charge.
Also, regarding Value Added Tax, the law has made provision for the Inclusion of the definition of “goods” and “services” and further clarifies when VAT should be applied to goods and services supplied in Nigeria. There has also been the N25 million threshold for taxable businesses which are required to file returns. The implication of this is that companies who do not make up to N25 Million Naira per annum are exempted from remitting VAT returns. To balance it up, the law makes an Increase in the naira penalty in the first month of payment default for VAT returns from N5, 000 to N50, 000 and N25, 000 for every month the default continues
The Finance Act is no doubt a welcome development in the Tax regime in Nigeria. As this new law is SME friendly and encourages them to thrive without the chocking effect of the multiple taxation schemes that hitherto limited their existence.
Team 618 Bees
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