The Nigerian government has reviewed its policy on stamp duty charges, levied on electronic payments.
According to Punch, the new proposed finance bill disclosed that the N50 stamp duty charge would now be levied on electronic payments above N10,000 as against payment above N1,000. The finance bill is a plan by the Federal Government to revamp tax administration in the country by introducing various tax increment
However, the new bill exempts bank transfers between two accounts owned by the same person or organization from stamp duty charges. The bill repeals a provision of the Stamp Duty Act 2014 which holds the threshold for receipts chargeable with stamp duty as N4 and above.
How did we get here? As reported on Nairametrics, the Central Bank of Nigeria (CBN), through a circular released on the 17th of September, which majorly affected Point of Sale transactions, authorized banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions.
The directive, which took effect immediately, was widely rejected by industry stakeholders and Nigerians at large, with concerns that the policy would stern the cashless economy and financial inclusion agenda of the government.
Meanwhile, in recent developments, as published on Nairametrics, some merchants had upgraded their POS machines to automatically charge N50 for transactions above N1,000 to avoid the occasional backlash that comes with seeking customers’ consents before adding the charge manually during POS payments.
This move by the Federal Government was expected, as Nairametrics had earlier published according to a source in the government, who pleaded anonymity.
What this means: Since the tax is here to stay, the new N10,000 limit would have some of the following consequences.
- The increased limit would improve POS usage and prevent a total boycott of POS by small businesses/retailers.
- The new limit might assist the government put a balance in its quest to make the economy cashless and improve tax revenue.
- This might also reduce the number of customers requesting to pay in cash, shifting the tax burden to large and heavy shoppers.
FAAC disburses N696.2 billion in July 2020, as Lagos State parts with N1.46 billion
The sum of N696.18 billion to the Federal, State, and Local governments in July 2020 from the FAAC account.
The Federation Account Allocation Committee (FAAC), disbursed the sum of N696.18 billion to the Federal, State, and Local governments in July 2020, from the revenue generated in the month of June 2020. This was stated in the latest FAAC report, released by the National Bureau of Statistics (NBS).
According to the report, the monthly disbursement increased by 27.2% compared to N547.3 billion shared in June, and 14.8% increase compared to N606.2 billion disbursed in May 2020.
Checks by Nairametrics research, shows that a total of N4.58 trillion has been shared to the three tiers of government, between January and July 2020. Highest disbursement was recorded in April (N780.9 billion), followed by N716.3 billion in January 2020.
Meanwhile, Lagos State – the economic hub of Nigeria, parted with N1.46 billion as external debt deductions in the month, indicating a total of N9.74 billion deductions between January and July 2020.
- The amount disbursed in July comprised of N474.53 billion from the Statutory Account, N128.83 billion from Valued Added Tax (VAT), N42.83 billion from Exchange Gain Differences, and Distribution of N50 billion from Non-Oil Revenue for the Month.
- Federal Government received a total of N266.13 billion from the total disbursement. States received a total of N185.77 billion, and Local Governments received N138.97 billion.
- The sum of N28.50 billion was shared among the oil producing states as 13% derivation fund.
- Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), and Department of Petroleum Resources (DPR) received N6.32 billion, N15.05 billion, and N2.68 billion respectively as cost of revenue collections.
South-South scoops highest share
The South-South region, also known as the Niger Delta region, received the highest share of the disbursement in the month of July. The region received a sum of N49.44 billion, representing 25.4% of the total net allocation for states.
This is largely because the region contributes mostly to crude oil production in Nigeria, which is a significant source of revenue for the federation. Out of the six states in the region, only Cross River State is not an oil producing state. Hence, Rivers, Edo, Akwa Ibom, Bayelsa, and Delta States received a total of N24.28 billion as part of 13% oil derivation fund.
North-West region received N36.83 billion (18.9%); followed by North-Central region, which received a net total of N30.69 billion (15.8%). Others include South-West (N29.55 billion), North-East (N26.32 billion), and South-East (N21.97 billion).
External debt deductions
A total of N4.47 billion was deducted from the state’s allocation, as external debt deductions for the month of July. Lagos State parted with the highest amount of N1.46 billion, representing 32.6% of the total debt deductions in the month. A sum of N9.74 billion has been deducted as a result of external debt obligations between January and July 2020.
It is worth noting that, the State’s external debt has declined by 9.67%, from $1.39 billion recorded as at the end of December 2019 to $1.26 billion in June 2020.
Others on the list of top 5 deductions are, Kaduna (N414.6 million), Oyo (N305.4 million), Rivers (N280.3 million), and Cross River (N222 million). On the flip side, Ogun State parted with the lowest, as N9.1 million was deducted, followed by Borno (N21.6 million), and Taraba (N24.5 million).
- With dwindling federally collected revenue, caused by volatility in global crude oil price and economic downtrend caused by COVID-19 pandemic, it is evident that federal allocations will likely face drastic decline, which is a cue for the State governments to strategize on more creative ways of generating revenue internally.
- A quick check at the states’ IGR numbers, shows that 91.9% of the states in Nigeria with the exception of Abuja, Ogun, and Lagos States rely more on federal allocation, as against internally generated revenue.
- This implies that several states in Nigeria are technically bankrupt without debt financing, and Federal Government monthly allocation.
COVID-19 Update in Nigeria
On the 23rd of September 2020, 111 new confirmed cases and 2 deaths were recorded in Nigeria
The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 57,724 confirmed cases.
On the 23rd of September 2020, 111 new confirmed cases and 2 deaths were recorded in Nigeria, having carried out a total daily test of 3,177 samples across the country.
To date, 57,724 cases have been confirmed, 48,985 cases have been discharged and 1,102 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 484,051 tests have been carried out as of September 23rd, 2020 compared to 480,874 tests a day earlier.
COVID-19 Case Updates- 23rd September 2020,
- Total Number of Cases – 57,724
- Total Number Discharged – 48,985
- Total Deaths – 1,102
- Total Tests Carried out – 484,051
According to the NCDC, the 111 new cases were reported from 12 states- Lagos (31), Gombe (18), Kaduna (18), FCT (15), Rivers (14), Imo (3), Kwara (3), Oyo (3), Bayelsa (2), Ogun (2), Edo (1), Osun (1).
Meanwhile, the latest numbers bring Lagos state total confirmed cases to 19,086, followed by Abuja (5,598), Plateau (3,304), Oyo (3,236), Edo (2,616), Kaduna (2,377), Rivers (2,277), Delta (1,800), Ogun (1,774), Kano (1,734), Ondo (1,606), Enugu (1,285), Ebonyi (1,038), Kwara (1,028), Abia (881), Gombe (857). Katsina (848), Osun (818), Borno (741), and Bauchi (692).
Imo State has recorded 565 cases, Benue (473), Nasarawa (449), Bayelsa (397), Jigawa (322), Ekiti (317), Akwa Ibom (288), Niger (259), Adamawa (234), Anambra (232), Sokoto (161), Taraba (95), Kebbi (93), Cross River (85), Zamfara (78), Yobe (75), while Kogi state has recorded 5 cases only.
Lock Down and Curfew
In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.
The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.
On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.
On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.
Buhari to finally send Petroleum Industry Bill to National Assembly next week
Sources in the Presidency have disclosed that the President may be presenting the bill to the National Assembly.
President Muhammadu Buhari is expected to present the long-awaited Petroleum Industry Bill (PIB) to the Senate as early as next week.
According to Reuters, who were quoting 4 sources familiar with the development, the presentation of the bill to the National Assembly, follows its official approval by the president late last week. This is as the National Assembly has already formed teams of members that will work most closely on the individual portions of the bill.
Both chambers of the National Assembly must have to pass the bill after deliberating on it before it can then be passed on to the president for his final signature.
The PIB which is an oil reform bill has been in the works for about 20 years, is key to the repositioning of Nigeria’s Oil and Gas Industry under its post-COVID-19 agenda as the main laws governing oil and gas exploration have not been fully updated since the 1960s due to some contentious issues like taxes, payments to local communities, terms and revenue sharing within Nigeria.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), had disclosed that the delay and non-passage of the bill has made international investors to start losing confidence in the country’s oil and gas industry.
While revealing last month that the PIB will be presented to the National Assembly in the next few weeks, the Minister of State for Petroleum Resources, Timipre Sylva, also said that the executive arm will be requesting the lawmakers to specially reconvene to receive and start deliberations on the bill.
These oil reforms and regulatory certainty became more pressing this year as low oil prices and a shift towards renewable energy made competition for investment from oil majors tougher.
The draft copy of the bill which was prepared by the Petroleum Ministry is a product of series of consultation between the federal government, oil and gas companies and other industry stakeholders.
Excerpts from the bill reported by Reuters include provisions that would streamline and reduce some oil and gas royalties, increase the amount of money companies pay to local communities and for environmental clean-ups alter the dispute resolution process between companies and the government.
It also included measures to push companies to develop gas discoveries and a framework for gas tariffs and delivery. Commercializing gas, particularly for use in local power generation, is a core government priority.