Monday, January 13, 2020 1:49 pm
President Muhammadu Buhari (retd.), has signed the finance bill into law.
He revealed this through his Twitter handle on today, saying: “I am pleased to announce that this morning I signed into Law the Finance Bill, 2019.”
With that, government will be able to increase its revenue and other things.
Below are the seven taxes the Finance Bill 2019 seeks to amend and how it will affect Nigerians, according to a recent report by Premium Times.
“1. Value Added Tax Act (VATA)
The VAT is covered under the Value Added Tax Act (VATA). Under the new Finance Bill, the rate usually paid for VAT will be increased by 50 per cent, from 5 per cent to 7.5 per cent. This is to help raise more revenue for the government which has been seriously challenged by the paucity of funds for its programmes.
As more revenue accrues into government treasury, Nigerians will have to spend more than they have been spending.
The price of crude oil is rising. Manufacturers and service providers are compelled to build on the extra 2.5 per cent increase in VAT rate and transfer to the consumers in increased prices of goods and services.
2. Petroleum Profits Tax
The bill repeals Section 60 of the Petroleum Profits Tax Act, and introduce Withholding Tax (WHT) of 10 per cent on dividends paid out of the profits of companies engaged in petroleum operations in Nigeria.
The new legislation effectively abolishes the tax exemption granted under the Petroleum Profit Tax Act for such income or dividends.
3. Capital Gains Tax
Under the new bill, Section 32 and 36 of the Capital Gains Tax Act is abolished.
With this, exemptions granted companies from paying capital gains tax when transferring assets between two entities during the restructuring have been abolished.
Also, capital gains tax would henceforth be paid by anyone who receives compensation in excess of N10 million after the loss of employment.
4. Stamp Duties
The Finance Bill 2019 also affects most Nigerians directly outside of the normal VAT they pay on certain goods and services.
With the passage and harmonisation of the two versions of the bill by the Senate and House of Representatives, the president’s assent to the bill will amend sections 2 and 89 of the Stamp Duties Act.
Under the new arrangement, payment of stamp duties will now cover electronic documents.
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Also, bank transfers from one account to another valued above N10,000 upward will attract a one-off stamp duty charge of N50.
People will, however, be exempted from payment when they are transferring from one of their accounts to another in the same bank.
5. Customs & Excise Tariff
The Finance Bill 2019 also impacts the Customs & Excise Tariff Act, as section 21 (5th Schedule) of the Customs, Excise Tariff, Etc. (Consolidation) Act 1995 will be amended.
Under the amendment, goods imported into Nigeria have been added to those that must pay excise duty in the country.
6. Personal Income Tax
Also, the Finance Bill 2019 amends sections 33, 49, and 58 of the Personal Income Tax Act and ensure that immediately it becomes operational, those without the Tax Identification Numbers (TIN) will be barred from operating any new or existing bank accounts in the country.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, said on Thursday during the presentation of the 2020 Budget details that the newly enacted Finance Bill will not take effect from January 1, 2020.
She said reports that people without TIN (tax identification number) will not be allowed to operate their accounts with banks is not true.
The minister said for the bill to come into effect, the Federal Inland Revenue Service (FIRS) will have to engage the commercial banks and work out a modality on how the new law will be implemented.
The bill will remove personal income tax relief that individuals enjoy on account of children and dependent adults.
7. Companies Income Tax (CITA)
The Finance Bill 2019 amends sections 9, 10, 13, 16, 19, 20, 23, 24, 27, 29, 31, 33, 39, 40, 41, 43, 53, 55, 77, 78, 80, 81, and 105 of CITA. It will also amend the third and seventh schedules of the Companies Income Tax Act (“CITA”).
Significantly, the amendments mean that companies without their TIN cannot operate corporate accounts in the country.
Also, foreign companies engaged in the ‘digital’ economy would be subjected to the payment of tax in Nigeria.
The amendments expect any digital company with a ‘significant economic presence’ in Nigeria, even without any physical presence in the country, to pay tax.”