The Finance Bill, 2020 yesterday got an accelerated consideration for first and second readings in the Senate, barely 24 hours after a presidential letter that demanded for its consideration and passage was recieved by the senate.
The executive bill seeks to support the implementation of the 2021 budget by proposing key reforms to specific taxation, customs, excise, fiscal and other laws.
It also seeks to amend the Capital Gains Tax Act; Personal Income Tax Act; and Value Added Tax.
The piece of legislation scaled second reading in the Red Chamber after the lawmakers debated its general principles.
On the aalue added Tax Section 4 of the VAT Act was amended by increasing the value added tax payable by consumers from 5% to 7.5%.
According to Section 19 the penalty payable by a taxable person for non-remittance within the specified period has been raised from 5% to 10%.
Under section 28, the penalty for failure to give notice of change of address or permanent cessation of business was increased from N 5000 to N 50, 000 in the first month and N25000 in subsequent months.
The bill proposes a new section 8 to cater for the registration of a taxable person upon commencement of business.
The penalty for failure to register has been increased from N10, 000 to N50, 000 in the first month and from N 5, 000 to N 25, 000 in the subsequent months.
The new section 15 of VAT introduces a threshold for VAT compliance. Thus companies with turnover of N25, 000, 000. 00 or more shall render their tax on or before the 21st of every month.
On the Capital Gains Act the bill proposes to amend section 36(2) of the Capital Gains Tax Act to the extent that exemption on tax liability for compensation for loss of office which was hitherto limited to N10, 000 is now extended to N10 million.
It also proposes a new section 32, which provides that no tax shall apply to any trade or business transferred to a Nigerian company for the purposes of better organization of that trade or business etc.
This tax exemption is however not applicable if the acquiring company subsequently disposes of the assets within one year of acquiring same.
On Personal Income Tax Act section 49 of the Act was amended to make the provision of Tax Identification Number (TIN) mandatory for persons intending to open a new bank account for purposes of business operations or for continuation of operation of such bank account.
The mandatory requirement for tax identification number is for accounts being operated for purposes of business transactions.
Leading the debate on the bill, the Senate Leader Yahaya Abdullahi said it has become imperative that the Nigerian tax legislation is updated frequently to respond to the challenges of today’s business environment.
He said the provisions contained in the Finance Bill are intended to incentivize economic activities to stimulate GDP growth and facilitate increase in the revenue generated
“If the Nigerian government is determined to generate sufficient revenue to finance its numerous projects and meet the sustainable development goals of eradicating poverty from the country, it is important for the government to take pragmatic steps. Such steps should include devising ingenious means of expanding the tax base and collecting taxes effectively.
“Tax education and sensitization of the public would go a long way in achieving compliance from taxpayers,” he said.
The Senate President Ahmad Lawan, after scaling second, referred the bill to the Senate Committees on Finance, Customs and Public Procurement and report back in one week.