As the Nigerian Senate prepares to begin legislative processes on the bill to amend various tax laws in the country, President Muhammadu Buhari has proposed sweeping changes to Nigeria’s tax system.
In a bid to drive revenue, President Buhari presented the 2019 Finance Bill, which seeks to introduce major changes in major tax laws, to the Legislature along with the 2019 Budget.
As earlier reported on Nairametrics, the Finance Bill has five strategic objectives, in terms of achieving incremental but necessary changes to our fiscal laws. These objectives are:
- promoting fiscal equity by mitigating instances of regressive taxation;
- reforming domestic tax laws to align with global best practices;
- introducing tax incentives for investments in infrastructure and capital markets; and
- supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business Reforms.
While presenting the budget earlier, President Buhari disclosed that the Finance Bill proposes an increase in the VAT rate from 5% to 7.5%. As such, the 2020 Appropriation Bill is based on this new VAT rate. The President also noted that the additional revenues would be used to fund health, education and infrastructure programmes. “As the States and Local Governments are allocated 85% of all VAT revenues, we expect to see greater quality and efficiency in their spending in these areas as well.”
[READ MORE: Buhari assents to the Deep Offshore Act]
The VAT Act already exempts pharmaceuticals, educational items, and basic commodities.
Meanwhile, details of the finance bill show some sweeping changes being proposed. Here are some of the important changes you should know about.
- Excess dividend tax to apply only to untaxed distributions other than profits specifically exempted from tax and franked investment income.
- Small businesses with turnover of less than N25 million to be exempted from Companies Income Tax.
- A lower CIT rate of 20% to apply to medium-sized companies with turnover between N25 million and N100 million.
- Commencement and cessation rules modified to eliminate overlaps and gaps to avoid double taxation and complication during commencement.
- Minimum tax provisions amended to 0.5% of turnover and exemption only applies to small companies (less than 25m turnover), so non-resident companies will now pay minimum tax.
- Insurance companies can now carry forward tax losses indefinitely, deduct reserve for unexpired risks on time apportionment bases while special minimum tax for insurance has been abolished.
- Bonus of 2% of tax payable (medium-sized companies) and 1% for large companies for early payment of CIT.
- Introduction of thin capitalisation of 30% of EBITDA for interest deductibility. Any excess deduction can be carried forward for 5 years.
- Deemed tax presence for non-residents with respect to imported technical and management services now taxable at a final WHT rate of 10%.
- Any expense incurred to earn exempt income now specifically disallowed as a deduction against other taxable income.
- Dividend distributed from petroleum profits now to suffer 10% withholding tax.
- Banks to request for Tax Identification Number (TIN) before opening bank accounts for individuals, while existing account holders must provide their TIN to continue operating their accounts.
- Email correspondences to be recognised for communicating with tax authorities.
- The meaning of supply and definition of goods and services has been expanded to cover intangible items other than land, among others.
- Specific requirement for VAT deregistration for discontinuing operations.
- Introduction of VAT reverse charge on imported services.
- VAT registration threshold of N25 million turnover in a calendar year to be introduced.
- Remittance of VAT now to be on cash basis, that is, difference between output VAT collected and input VAT paid in the preceding month.
- Compensation for loss of employment below N10m to be exempted from CGT
- Stamp duty on bank transfer to apply only on amount from N10,000 and above. Transfers between the same owner’s accounts in the same bank also to be exempted.
Applications across Nigeria, South Africa and Kenya now open for the 2021 Facebook Community Accelerator Program
The selected leaders will spend five months learning from experts, coaches and a customised curriculum so they can strengthen their community.
Today, Facebook is inviting community leaders from Nigeria, South Africa and Kenya to apply for the 2021 Facebook Community Accelerator Program—a program that offers participants training, mentorship and up to $50,000 USD in funds to invest in an initiative that extends their community’s positive impact.
The aim of the Community Accelerator is to help leaders of Facebook communities to harness the power of their community to turn ideas into action. The selected leaders will spend five months learning from experts, coaches and a customised curriculum so they can strengthen their community.
Lessons include community identity foundations, leading action-oriented programmes and sustainability. Participants will also receive early access to new Facebook products aimed at helping communities better manage and activate their members.
Plan an initiative
Participants will identify an important initiative that will create a positive impact on the broader world and develop a plan to mobilise their community around their goal. Initiatives will be shared with potential partners, mentors and a panel of judges for the chance to be awarded funding and receive public recognition.
Participants will then spend three months executing their initiatives. They will collaborate with advocates and leaders in the community space and work with the Facebook team to bring their ideas to life.
Says Kiran Yoliswa, Partner Management Lead, Middle East and Africa Community Partnerships at Facebook: “Facebook communities and their leaders are helping to resolve social challenges, sharing knowledge and information, while connecting with others that share their interests or passion for a cause. We’ve seen so many incredible communities from across South Africa, Kenya and Nigeria using our platform to drive change and provide support and encouragement for thousands of people, we’re excited to offer their Facebook Community leaders this program to help amplify their impact even more.”
How to apply
This program is open to communities that have a presence in Facebook Groups with leaders who are 18 years or older. Communities must have existed for over one year and must have a minimum size of 1,000 members. Applications open today, May 4 – 31, 2021.
The Community Accelerator is part of our Facebook Community Leadership Program, a global initiative that invests in people building communities. Learn more and apply here.
NIN registration: 54 million Nigerians have now enrolled – Buhari
12 million Nigerians were enrolled into the National Identity Database in the past 6 months.
President Muhammadu Buhari disclosed that the FG has enrolled 54 million Nigerians into the National Identity Database, citing that 12 million were enrolled in the past 6 months alone and that the final aim of the scheme is to secure Nigeria’s security infrastructure.
President Buhari disclosed this in a statement on Thursday evening.
What the President said about NIN enrollment
“I am pleased with the success we are recording in the enrollment of persons into the National Identification Number (NIN) database. 54 million Nigerians have now enrolled; I am told over 12 million of these within the last six months. Our goal is total coverage.
The National Identification Number (NIN) is the foundational digital ID for the country. It will cover one of the weaknesses in our security structure. We will be able to easily identify all Nigerians, including the crooks in our midst.”
The President added that both legal residents and Nigerians are expected to obtain the NIN as it would be beneficial to government agencies to utilise resources efficiently.
In case you missed it
The Federal Government announced a further extension of the ongoing National Identification Number (NIN) registration and linkage with Subscriber Identity Module (SIM) exercises to a new deadline of June 30, 2021.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- 2021 Q1 Results: FTN Cocoa Processor Plc reports loss after tax of N162.21 million
- Tantalizers Plc reports a loss after tax of N97.75 million in FY 2020 in Q1 2021.
- Courteville Business Solutions Plc proposes final dividend of 3 kobo per share for FY 2020.
- 2020 FY Results: UPDC Real Estate Investment Trust records over 500% growth in Profit after tax.
- Sovereign Trust Insurance records a 43% surge in profit after tax to N392.1 million in Q1 2021.