There is a move by the Federal Government to tax dividends paid from the profit of oil companies. This is contained in the Finance Bill submitted by President Muhammadu Buhari which has now passed the second reading at the Senate.
The Details: The move was disclosed by Nigeria’s Finance Minister, Zainab Ahmed yesterday in a statement issued by her Special Adviser Media and Communication, Yunusa Abdullahi, according to the Punch.
Ahmed’s words: “This bill seeks to improve revenue by removing the tax exemption granted for dividends or income received from companies charged under Petroleum Profits Tax Act.
“The bill contains some changes to the Companies Income Tax Act, Value Added Tax Act, Petroleum Profits Tax Act, Personal Income Tax Act, Capital Gains Tax Act, Customs and Excise Tariff Act and Stamp Duties Act.
“The bill also seeks to address the taxation of industries, such as insurance, start-ups and the capital markets, evaluated by the Federal Government as critical to the growth and development of the Nigerian economy with a view to stimulating activities in those sectors and fostering overall economic growth.”
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Giving details on the bill, Ahmed noted that the bill would always be accompanied by finance bills to provide a suitable roadmap in achieving revenue projections. She explained that it would effectively solve the issue of individual income taxes in Nigeria.
Touching on the area of Capital Gains Tax, she explained that the revision of the bill would include taxation of business combination as well as prevent abuse of any of the provisions of the act on group restructuring. She also added that bill would help the government generate extra revenue from stamp duties imposed on electronic transfers.
“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.
“It is our hope that the bill will be enacted by the National Assembly as soon as possible to support the implementation of the 2020 Appropriation Act,” the minister added.
What you should know: The Finance Bill was presented to the joint session of the National Assembly on October 14 2019.
The President forwarded the Finance Bill 2019 for passage into law in pursuant to Sections 58 and 59 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended).
The Finance Bill has four 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.