President Muhammadu Buhari has signed the 2019 finance bill into law. The disclosure was made known via the President’s Twitter handle on Monday.
According to the President, this is the first time, since the return of democracy in 1999 that a Federal Budget is being accompanied by the passage of a Finance Bill.
The President’s Tweet partly read:
“I am pleased to announce that this morning I signed into law the Finance Bill, 2019. We introduced the Bill alongside the 2020 Budget, to:
- Reform Nigeria’s tax laws to align with global best practices;
- Support MSMEs in line with our Ease of Doing Business Reforms;
- Incentivize investments in infrastructure and capital markets;
- Raise Government revenue.
“This is the first time, since the return of democracy in 1999, that a Federal Budget is being accompanied by the passage of a Finance Bill specially designed to support its implementation and to create a truly enabling environment for business and investment by the private sector.
“I thank the leadership and members of the 9th National Assembly for the hard work and support that have gone into the passage of the landmark Deep Offshore and Inland Basin PSC Amendment Bill, and the Finance Bill; both vital to the successful implementation of the 2020 Budget.”
The highlights of the Finance Bill
In October 2019, President Muhammadu Buhari submitted the Finance Bill 2019 to the National Assembly. The bill sought to implement wide fiscal reforms and transform the government approach to tax administration.
Here are details of the finance bill 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 a turnover of less than N25 million are now exempted from Companies Income Tax.
- A lower CIT rate of 20% to apply to medium-sized companies with a turnover between N25 million and N100 million.
- Commencement and cessation rule 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 a cash basis, that is, the 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 the amount from N10,000 and above. Transfers between the same owner’s accounts in the same bank also to be exempted.
What it means: After intense criticisms of the 2019 finance bill, it is now law after signed by the President. It means all components contained in the bill will now be fully implemented. One of the major highlights that triggered criticisms among Nigerians is the VAT increase from 5% to 7.5% increase.
Experts have argued that this may spike the price of items and largely affect the purchasing power of Nigerians. While some components introduced increments, several others are aimed at reducing taxes, especially for SMEs, thereby stimulating economic activities.
MRS Oil announces resignation of its MD, appoints an acting MD
The disclosure was made in a notification by the oil marketing giant.
Oil marketing giant, MRS Oil Nigeria Plc, has announced the resignation of its Managing Director, Mrs Priscilla Thorpe-Monclus with effect from August 5, 2020, and the subsequent appointment of Mr Marco Storari as the Managing Director in an acting capacity.
The oil firm also announced the resignation of one of its directors, Mr Christopher Okorie, also with effect from August 5, 2020.
The disclosure was made in a notification by the oil marketing giant, which was sent to the Nigerian Stock Exchange (NSE) on August 7, 2020, and signed by its Company Secretary O.M. Jafojo.
The statement from MRS Oil Nigeria Plc reads:
“At the Board Meeting of August 5, 2020, the Board of Directors of MRS Oil Nigeria Plc, considered and approved the resignation of Mrs Priscilla Thorpe-Monclus as Managing Director and Director of the Company, and the resignation of Mr Christopher Okorie as Director of the Company, effective August 5, 2020.
“The Board of Directors also considered and approved the appointment of Mr Marco Storari as Director and Managing Director (Acting) of the Company.’’
According to the statement, Mrs Thorpe-Monclus, during her tenure as the Managing Director, showed great commitment and dedication in her drive for the new MRS Brand, which resulted in the unveiling of three new retail outlets in Lagos, one in Owerri, two in Kano and two new outlets in Abuja. It also resulted in an overall business turnaround for the oil company.
The board commended the efforts of Mrs Thorpe-Monclus and Mr Okorie to the growth of the company and wished them the best in their future endeavours.
Mr Marco Storari, on the other hand, is a seasoned leader with more than 3 decades’ experience in the management, shipping, trading and terminal operations in the industry. He has held various high-level positions where he recorded business successes in companies in Italy, Monaco and Nigeria.
He was, until his appointment as Acting Managing Directors, the Group Executive Director, Storage and Terminal for MRS Holdings Limited. He has been a driving force in the transformation of the MRS Group over the last 10 years.
The Board of Directors of MRS has expressed its confidence in the ability of Storari to bring to bear his wealth of experience in the industry, to improve business efficiency.
MRS Oil Nigeria Plc is a fully integrated and efficient downstream player, with leading positions in the Nigerian Oil Industry. The oil firm, with its head office in Nigeria’s commercial capital, Lagos, previously traded under the name Texaco Nigeria Plc. It has 3 business units namely sale of petroleum products at retail outlets, sale of aviation fuel, and blending of lubricants.
Ogun State initiates tax relief scheme to cushion effects of COVID-19
Governor Abiodun urged taxpayers in the state to make use of the relief packages.
The Ogun State Government has announced that its Internal Revenue Service would launch tax relief packages to cushion the economic effects of the COVID-19 pandemic on taxpayers in the state.
This was announced by the State Governor, Prince Dapo Abiodun, on Saturday morning through a statement that was issued via his official Twitter handle.
Governor Abiodun urged taxpayers in the state to make use of the relief packages which include a 6 month extension of the 2019 income tax returns deadline for self-employed residents from March 31, 2020 to September 30, 2020.
He also granted an “8-month extension of filling of 2019 annual PAYE returns by PAYE operators/tax agents from January 31, 2020 to September 30, as well as complete waiver of interest and penalty for late filling for the extension period.”
I have approved certain tax reliefs to be immediately effected by the Ogun State Internal Revenue Service towards cushioning COVID-19 economic effects on our taxpayers. These include: pic.twitter.com/SIyEBt26G4
— Prince Dr. Dapo Abiodun – MFR (@dabiodunMFR) August 8, 2020
Other packages include a total waiver of interest and penalties for late remittances of PAYE for the extended period, and a waiver for late payment of Personal Income Tax, which would run from January 1, 2020 to December 31.
Finally, the state granted a waiver on weekly tax payments by operators of betting and pool businesses from April 1 to June 30, 2020.
The Governor said that the state’s Tax Audit Reconciliation Committee (TARC) would run its operations through video conferencing to “continue ensuring ease of doing business while maintaining physical distancing.
COVID-19: World Bank approves $114 million response funds for Nigeria
FG is expected to provide grants from the CoPREP to the 36 states and the FCT.
The World Bank has approved the sum of $114 million to assist Nigeria in its fight against the coronavirus pandemic.
The fund is to help Nigeria prevent, identify and respond to the dangers associated with the coronavirus disease with special focus on the various states and the Federal Capital Territory.
This was disclosed in a statement from the bank on Friday, August 7, 2020.
According to the statement, the funds come in the form of $100 million credit facility from the International Development Association (IDA) and $14 million grant from the Pandemic Emergency Financing Facility.
It also states that the Federal Government is expected to provide grants from the COVID-19 Preparedness and Response Project (CoPREP) to the 36 states and the Federal Capital Territory.
The World Bank Director for Nigeria, Shubham Chaudhuri, in a statement on Friday, said, “Nigeria has ramped up its efforts to contain the Covid-19 outbreak, but more needs to be done at the states level, which are at the front line of the response.”
He disclosed that the project would provide the states with the much needed direct technical and fiscal support in order to strengthen their position in the fight against the pandemic.
The World Bank Chief also pointed out that the project would finance federal procurements of medical equipment, laboratory tests and medicines to be distributed to the states based on their needs.
According to the World Bank, CoPREP would finance further support to all the 36 states and the FCT through the NCDC to implement the COVID-19 Incident Action Plan.
Nigeria has recorded about 45,687 confirmed cases of the coronavirus disease with 936 fatalities and 32,637 people discharged as at August 7, 2020. Some serious concerns have been raised about the country’s testing capacity, which though has improved is still regarded as inadequate.