The federal government is to issue guidelines on the implementation process of the Finance Act, which President Muhammadu Buhari signed into law on Monday.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who gave the indication in a statement by her media aide, Mr. Yunusa Abdullahi, commended the president for ensuring that “the strategic objectives in the Finance Act recognise the crucial relationship between fiscal policy, the regulatory environment and the strong capital market we all seek to effect in Nigeria.”
Zainab added: “We planned that, going forward, the annual budget will always be accompanied by finance bills to enable the realisation of revenue projections. Future finance bills will therefore also provide us with additional opportunities to incrementally improve the fiscal policy and regulatory/legal environment in order to further strengthen our domestic capital market, and ultimately ensure sustained and inclusive growth and development.”
Highlighting the amendments contained in the law, Ahmed noted that the Finance Act, 2019 has offered incremental, but necessary, amendments to certain provisions of existing tax laws, including the Companies Income Tax Act (CITA), 2004; Personal Income Tax Act (PITA), 2007; Value Added Tax Act (VATA), 2007; Petroleum Profits Tax Act (PPTA); Stamp Duties Act (SDA), 2007; Customs and Excise Tariff Act, 2004; and Capital Gains Tax Act, 2007.
According to her, some of the proposals contained in the Finance Act include: Amendment of excess dividend tax rules that result in double taxation and discourage investments; review of commencement and cessation business rules that also lead to double taxation; an incentive of two per cent bonus for early tax payment by medium-sized companies and one per cent for large companies; an increase in the VAT rate; moderation of inefficient and ineffective tax incentives and closing loopholes in the existing tax laws that allow tax avoidance resulting in tax revenue leakages.
The Finance Act, she added, has also taken care of essential palliatives to support medium small and micro enterprises (MSMEs) and mitigate the impact of the Value Added Tax (VAT) rate increase on the most vulnerable businesses, communities and citizens in the economy.
“Some of these measures include: Expanding the list of VAT-exempt items (e.g. basic food items, educational materials and medical supplies); introducing a VAT registration threshold for MSMEs with a turnover of less than N25 million per annum; reducing the corporate tax rate for MSMEs from 30 per cent to 20 per cent for small firms (with turnover of between N25 million and N100 million per annum.) and exempting micro-firms (with turnover of less than N25 million per annum),”the minister said.
On the implementation process of the law, Ahmed stated that she would issue a statement soon. It has reported that tax experts welcomed the signing of Finance Bill 2019 into law by Buhari, saying it will improve government’s revenue and ease tax burden on MSMEs.
The Finance Bill, which the president signed into law, will kick-start the implementation of the new VAT rate of 7.5 per cent, a 50 per cent hike from the old rate of five per cent.
