Everything you should know about the new Finance Bill Signed into Law!

Regardless of where you are in the grand scheme of ‘Nigeria’ the new Finance Bill is going to affect you one way or another. Here are the things you need to know to have an easy sail whether you are a business owner, consumer or decision-maker. First, let’s run through the quick facts

Do you know that the Nigerian economy is largely driven by the telecommunications, agriculture and trade sectors? The World Bank and IMF have projected the growth rate between 2.2% and 2.3% if the execution of policy reforms are implemented and uncertainty is minimized.

Overview

To ensure uncertainty and continue the path of a stable economy, the President amended the Nigerian Tax Laws all contained in the Finance Bill and the bill is supposed to do the following

• Promote fiscal equality
• align local tax laws with international standards
• introduce tax incentives for investments in infrastructure and capital markets
• Support Small and Medium Scale Enterprises and;
• Raise revenue for the Federal Government

So here are the Major Highlights

CIT – Company Income Tax

For business owners with registered companies, the benchmarked 30% will remain for Large scale Businesses earning ₦100 million or above in revenue, while Medium Scale Businesses generating revenue within the ₦25 – ₦100 million range will pay 20% tax while small scale businesses earning below the 25 million in revenue will pay nothing. but will be penalized if their tax returns are not filed promptly.

VAT – Value Added Tax

With the new Finance Bill in place, Companies will now pay 50,000 for the first month and 25,000 afterwards for failing to file their VAT tax returns or register for VAT.

Companies who fail to notify the FIRS of change in company address or permanent cessation of their trade or business will also pay the same amount

Group reorganizations will be exempt from VAT as long as the entities involved meet a certain specified requirement or is sold to a Nigerian company.

VAT has been increased from 5.0% to 7.5% to reduce budget deficits as well as fund the new minimum wage. Basic food items are exempt from paying VAT such as bread, cereal etc… Agro and Aqua based staple foods as well as sanitary items.

In addition, only businesses with an annual turnover of 25 million and above can register for, charge and collect VAT on its sales

PITA – Personal Income Tax Act

With the new Finance Bill in place, The Federal Inland Revenue Services (FIRS) will assume all the duties of the Joint Tax Board (JTB) with regard to administering the PITA. Pensions contributions will no longer require approval from the JTB to be tax-deductible. Also, all gratuities will now be unconditionally tax exempt.

However, withdrawal of funds from pensions scheme will now no longer be tax-exempt and finally, child relief for families up to 4 and dependents (2 maximum) will no longer exist.

All banks will be mandated to request the Tax Identification Number of each individual to continue to operate their accounts.

Email correspondence will now be a viable channel to correspond with taxpayers and failure to tax-deduct will incur 10% on funds not taxed.