Business News

Finance Bill designed for the good of Nigerians – Finance Minister, Zainab Ahmed

Zainab Ahmed said the increased 7.5 value-added tax (VAT) is for the good of Nigerians and will help with the 2020 Budget. #AHMED

Published

11 months ago

January 15, 2020

Fakoyejo Olalekan

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The Finance Minister, Zainab Ahmed, has described the increased 7.5% value-added tax (VAT) as an initiative designed for the good of Nigerians and would help with fund the 2020 Budget. The Federal Government plans to use the 2020 Finance Bill to raise N8.155 trillion as it moves to implement the tax reforms.

Ahmed said the capital raised by the tax reforms would be for the benefit of Nigerians as 15% of the capital would go to the Federal Government, 35% to the Local Governments and 50% to the States.

Nairametrics had previously reported that President Muhammadu Buhari signed the 2019 Finance Bill into law. 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.

President Buhari had stated that the Finance Bill was introduced 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.

What you need to know: The Finance Bill contains some measures for the Micro, Small and Medium Enterprises:

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% to 20% for small firms (with turnover of between N25million and N100million per annum.)
Exempting micro-firms (with turnover of less than N25million per annum).

Finance Bill is for the good of Nigerians: Ahmed said the Finance Bill “proposes to introduce tax reforms that will help government achieve its revenue projections for the 2020 Budget (N8.155trillion).”

She added that, “Though the draft Finance Bill proposes an increase of VAT rate from 5% to 7.5%, it is important to note that a large sum of money realised from the taxation would rather go to the people; the States and the Local Governments Areas (LGAs) are to get 50% and 35% respectively while only 15% will go to the Federal Government.”

The minister further explained that the Finance Bill “is a peoples Bill considering the expansion of VAT exemption list which includes: basic food items (agro and aqua based staple foods) such as additives, cereals, cooking oils, culinary herbs, fish of all kinds (other than ornamented), flour and starch, fruits, live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, and water; Locally manufactured sanitary towels, tuition (primary, secondary and tertiary education); and services rendered by Microfinance Banks.”

Finance Bill not a one-time initiative: According to Ahmed, the Finance Bill might become a culture in the government.

“Future finance bills will also provide us with additional opportunities to 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.”

She added that the Finance Bill “has also taken care of essential palliatives to support Micro Small and Medium Enterprises (MSMEs) and mitigate the impact of the VAT rate increase on the most vulnerable businesses, communities and citizens in the economy.”

Fakoyejo Olalekan

Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

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Corporate Press Releases

elev8 launches new Nigeria Academy, to host event series on Nigeria’s digital future

The event will bring together experts in business, digital technology and economic development to amplify Nigeria’s digital dialogue.

Published

1 hour ago

November 27, 2020

NM Press

Global technology training company elev8 is delighted to announce the launch of its new academy in Lagos with a series of online events focused on digital transformation in Nigeria.

The Knowledge-based Economy – A Pathway to Nigeria’s Digitally Enabled Future is an opportunity for business leaders to participate in Nigeria’s digital dialogue with industry experts, technology trailblazers and government leaders.

C-suite executives and digital leaders across the country are invited to join elev8 for a special series of events exploring the impact of new technologies and digitalization, as well as the potential risks to economic growth, such as Covid-19.

Digital enablement is increasingly becoming a hot topic for global businesses. In the next few years, the digital economy is projected to be responsible for a quarter of global GDP.

Across the world, businesses are accelerating digital adoption to establish a competitive edge, drive growth and ensure efficiency. For Nigeria to compete on the world stage, investment in new technologies and skills is essential in supporting a transition to a knowledge-based economy.

Digital Event: The Knowledge-based Economy – A Pathway to Nigeria’s Digitally Enabled Future

30 November – 3 December

The event will commence with the release of a cutting-edge research report on November 30. Produced in conjunction with BusinessDay Research and Intelligence Unit.

The report examines the impact of digital transformation on Nigeria’s economic growth over the next three years.

On December 1, participants will gain valuable insight on the digital strategies and tactics deployed by leading market players in an exclusive masterclass, Digitize or Die, hosted by award-winning technology and digital innovator, Sabine VanderLinden.

The event will close on Thursday, December 3 with a live digital dialogue, featuring an expert panel of digital specialists, government figures, and business leaders, looking at the ways that digitization will impact Nigeria’s economic development.

To find out more, or register for the event, please visit: www.elev8me.com/nigeria20

Companies

ValuAlliance distributes value fund of N10 per unit for H1, 2020

ValuAlliance Value Fund has declared the distribution to unit holders, the sum of N10.00/unit for the financial year ended June 30, 2020.

Published

2 hours ago

November 27, 2020

Chidi Emenike

ValuAlliance Value Fund (“Value Fund” or the “Fund”), formerly called the SIM Capital Alliance Value Fund, has declared the distribution to unit holders, the sum of N10.00/unit for the financial year ended June 30, 2020.

This is according to a notification by the firm, sent to the Nigerian Stock Exchange market and seen by Nairametrics.

The latest distribution indicates a decline of N1/unit when compared to its distribution in the corresponding period last year.

The key highlights of the recent notification include:

Annual General Meeting Date: 21st December 2020
AGM Venue: 33A Alfred Rewane (Kingsway) Road, Ikoyi, Lagos, Nigeria
Proposed Distribution: ₦10/unit
Qualification Date: 9th December 2020
Closure of Register Date: 10th December 2020
Payment Date: 23rd December 2020

What you should know

The Value Fund is a closed-end Fund registered and regulated by the Securities and Exchange Commission (SEC), whose units are listed on the main board of the NSE.
The Value Fund for the year ended June 30, 2020 achieved a growth of 2.83% Year-on-Year, with a cumulative return of 125.32% since inception, which translates to a 9-year Internal Rate of Return (IRR) of 12.06%.

Economy & Politics

Nigeria generates N416.01 billion from Company Income Tax in Q3 2020

Total company income tax generated increased by 3.48% in Q3 2020, compared to N402.03 billion recorded in Q2 2020.

Published

4 hours ago

November 27, 2020

Samuel Oyekanmi

Avoid paying taxes, Nigeria generates N416.01 billion from Company Income Tax in Q3 2020

Nigeria generated the sum of N416.01 billion from Company Income Tax (CIT) in the third quarter of 2020. This was revealed in the Company Income Tax by Sectors report, recently released by the National Bureau of Statistics (NBS).

According to the report, the total CIT generated increased by 3.48% in Q3 2020, compared to N402.03 billion recorded in the previous quarter (Q2 2020). It reduced by 20.13% compared to N520.89 billion recorded in the corresponding quarter (Q3) of 2019.

READ: Nigeria’s Value Added Tax collection dips slightly in Q1 2019

READ: VAT revenue may have hit 4 year high in 2018

Highlights

Company income tax generated year-to-date sums up to N1.11 trillion as against N1.26 trillion in the comparable period of 2019.
Professional Services including Telecoms generated the highest amount of CIT with N55.52 billion generated, closely followed by Other Manufacturing with N42.03 billion.
Banks & Financial Institutions generated a sum of N24.05 billion.
Mining generated the least, closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million, and N321.72 million generated respectively.

READ: FBN Holdings Plc posts Profit of N21.9 billion in Q3 2020

Out of the total amount generated in Q3 2020, N244.70 billion was generated as CIT locally, while N70.34 billion was generated as foreign CIT payment. The balance of N100.97 billion was generated as income taxes from other payments.

Automobiles and Assemblies grows CIT by 994%

In terms of sectors with the highest increase in company income tax remittances, the Automobiles and Assemblies sector grew its CIT by 994%, from N81.6 million in Q2 2020 to N892.7 million. It was closely followed by the Gas sector, which grew its CIT by 626% to stand at N4.76 billion from N655.5 million.

READ: FG rejects calls for tax reduction, offers tax relief for donors to intervention funds

On the flip side, transport and haulage services recorded the highest decline in company income tax, as it reduced by 76% to stand at N7.35 billion from N31.1 billion. This is closely followed by Banks and financial institutions, which declined by 51% to stand at N24.1 billion.

READ: Unity Bank Plc posts gross earnings of N11.04 billion in Q3 2020

Bottom line

The rise in company income tax is an indication of the Nigerian government’s move to improve the generation of revenue from the fiscal side as against oil exportation. However, the halt in economic activities due to the COVID-19 pandemic contributed to the year-on-year decline in company income tax.