UBA ads

Two days ago, President Muhammadu Buhari signed the Finance Bill into law, hoping it would support the implementation of the 2020 budget. We recall the bill specified certain key objectives which it intends to achieve upon ratification and these were re-emphasised by the president in the tweet from his official account. They include:

  • Reform Nigeria’s tax laws to align with global best practices and ensure fiscal equity
  • Support Micro, Small and Medium Scale Enterprises in line with the Ease of Doing Business Reforms
  • Incentivize investments in infrastructure and capital markets
  • Raise government revenues.
ECOWAS economy grows by 3.1%, expected to hit 3.3% by end of 2019 , Dangote Refinery would help save $10 billion in forex - FG,, FG monitoring ‘Eco’ adoption by ECOWAS members amidst threat to Naira, CBN
Mrs Ahmed Zainab

The bill provides for significant adjustments to key tax laws aimed at boosting federal government revenue profile while supporting state governments to meet the new minimum wage revision. On Companies Income Tax (CIT) Act, the new Finance Bill provides a wider tax base for Non-Resident Companies (NRCs) following the introduction of provisions that create taxable presence for NRCs carrying on digital activities, consultancy, technical, management or professional services in Nigeria provided they have “significant economic presence”.

The definition of “significant economic presence” however remains unclear with the minister having the prerogative to determine that. Another significant adjustment made on the CIT act is the recategorization of companies for CIT payments. Small companies (Turnover up to N25m) are not required to make CIT payments while medium companies (Turnover > N25m but < N100m) will be charged 20%. Large companies (Turnover > N100m) will continue paying the previous 30% tax rate for CIT. The amendments also specify companies must now pay a minimum tax.

Another major highlight of the finance bill is the revision of Value-Added Tax rate from 5% to 7.5%. However, several exemptions were included in the amendment as part of efforts to cushion the impact of the increase on consumption.

[READ MORE: Telecommunications: Broadband penetration set to grow)

Furthermore, the Bill moderates the stamp duty on receipts to N50 on every transaction from N10,000 and above; and expands the definition of receipt to cover electronic transactions. This gives a legal basis to what is already being practised by Nigerian banks but raises the threshold to N10,000 from N1,000.

In our opinion, the Federal Government’s move is largely aimed at supporting government’s revenue. However, a key positive is that reduces the tax burden on MSMEs. While we think the provisions will aid improvement in government revenue, we reiterate that the government should focus on improving the tax base and compliance levels as this would provide better support for revenue generation without hurting an already beleaguered private sector.


Standard chartered


Member of the Nigerian Stock Exchange,

Standard chartered

First City Plaza, 44 Marina,


PO Box 9117,

Lagos State,



Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.