The Finance Bill will affect everyone in Nigeria, either directly or indirectly, as an individual or business enterprise.
For example, there is a provision in the Bill, in addition to tax breaks allowed to small businesses, which would exempt the minimum wage earners from paying personal income tax, intended to stimulate the economy and improve the standard of living of the common man.
Taiwo Oyedele, the Fiscal Policy Partner and West Africa Tax Leader at PWC, who spoke on the topic “Addressing the Finance Bill 2021” at the webinar session on “Regulatory outlook for the Nigerian economy in 2021,” hosted by Nairametrics, welcomed the decision to exempt minimum wage earners from paying income tax but said:
- “I hope the country would, in the near future, extend this exemption to people that earn about N100, 000 per month. A country cannot become rich by taxing poverty. The money is with the people who are making money; and you have to be fair in administering taxes by asking people to pay according to their ability.”
- “In South Africa, people that earn about N150,000 per month are exempted from paying income tax. Despite this exemption, South Africa still generates more from personal income tax than the entire Federal Government generated revenues and all the taxes of the thirty-six (36) states combined, even though the population of the country is only about a quarter of Nigeria’s population.”
What you should know
- Individuals that are on minimum wage threshold are exempted from paying tax.
- Small businesses with turnover less than N25million will be exempted from CIT, while a lower CIT rate of 20% will apply to medium-sized companies with turnover between N25m and N100m. Small businesses may have to prove to their customers that they do not meet the threshold to avoid withholding tax.
- The minimum tax rate has been amended to 0.25% of the company’s turnover. Companies with a turnover of less than N25 million in a year of assessment will be exempted from the minimum tax. In other words, Small Companies are exempted from minimum tax.
- Large companies that are not small or medium-sized, in other words companies with a gross turnover above N100 million, are still required to pay 30% as CIT.
- Companies that make CIT payment on or before 90 days from the due date for filing will be entitled to a bonus of 1% (for large companies with turnover greater than N100m) or 2% (for medium-sized companies with turnover between N25m and N100m)
- The penalty for non-compliance of filing CIT has been increased from N25,000 to NGN50,000 for the first month of defaulting, and an increase from N5,000 to NGN25,000 for each subsequent month in which the failure to file continues.
- The penalty for failure to notify FIRS of change in company address has been reviewed upwards to N50,000 for the first month of default and N25,000 for each subsequent month of default. This penalty also covers failure to notify FIRS of permanent cessation of trade or business.
- The Finance Bill has now expanded the list of items to include basic food items, for the purpose of VAT exemption, which is referred to as agro and aqua-based staple foods, such as brown and white bread, cereals including maize, rice, wheat, millet, barley and sorghum; fish of all kinds, flour and starch meals; fruits, nuts, pulses and vegetables of various kinds, roots such as yam, cocoyam, sweet and Irish potatoes; meat and poultry products including eggs; milk, salt and herbs of various kinds, cooking oils, natural water and table water.
- The Bill also includes sanitary items in the exemption list, and clarifies those services provided by Microfinance Banks, and tuition paid for nursery, primary and secondary educations are VAT exempt.
- Every individual is now required to have a TIN to operate a bank account for business purposes and in the event of pre-existing account holders, they are required to obtain a TIN.
- Corporate organizations that donated towards the COVID-19 pandemic Appeal fund are to get deductions in lieu of taxes.
- There is a Company Gain Tax (CGT) exemption for compensation for loss of employment not exceeding N10million.
- Import duties for trucks/vehicles have been reduced.
- There is an Unclaimed Funds Trust Fund where all unclaimed dividends & dormant account balances are mopped up and assigned to.
- Electronic Money Transfer levy shall now replace the stamp duty charge on bank transfer
- A prescribed format of accounts for small businesses shall be drafted by FIRS to avoid the high cost of providing audited financial statements, in filling of accounts for assessment
- Small businesses are now exempted from paying Education tax
- Electronic means i.e. e-mail, is now accepted as a means of filling returns and receiving assessment as well as lodging complaints to the tax authority.
- Penalty for failure to deduct tax will also apply to agents appointed for tax deduction. This penalty is 10% of the tax not deducted, plus interest at the prevailing monetary policy rate of the Central Bank of Nigeria.
- The conditions attached to tax exemption on gratuities have been removed and thus gratuities are unconditionally tax exempt.
The aim of the Finance Bill is to, amongst other things, bring about changes to Nigeria’s Tax Laws by making them fair enough and more responsive to the tax reform policies of the Federal Government, enhance its implementation and effectiveness, improve the Ease of Doing Business Reforms and to support the funding of the 2020 Budget and subsequent budgets.
The tax system is the major focus of the Bill and tweaking it a little bit by government is being considered an assured source of raising higher revenues for embarking on key developments.
Therefore, there is need for effective and full compliance by all as well as learning, unlearning and relearning of all relevant tax laws to stay relevant in these “taxing” times.
Lagos State seeks investors in aquatic and livestock agriculture value chain
The Commissioner revealed that the scheme was in line with the State’s five-year strategic agriculture roadmap.
The Lagos State Government announced it is seeking private sector collaboration for Agriculture sector value chain development in livestock feed mills, fisheries and red meat.
This was disclosed by the State Commissioner for Agriculture, Ms Abisola Olusanya, in a statement on Sunday in Lagos.
The Commissioner revealed that the scheme was in line with the State’s five-year strategic agriculture roadmap, as the State identified the 3 main sectors for value chain disruption.
She also added that investment in the sectors would also develop jobs for the industry and boost the State’s GDP growth, through Private Sector collaboration as Lagos residents consume over N5 trillion worth of food annually.
“The objective is to stimulate and encourage more public-private partnerships in the three value chains,” she said.
“When you consider this pool of transactions happening in Lagos, it shows that we are the market. For instance, we demand over 400,000 metric tons of fish on an annual basis.
“But our fishermen and our aquaculture farmers are only able to produce just about 174,000 metric tons with deficit of 200,000 metric tons,” she added.
She also disclosed that the state has 9,000 artisanal fishermen, and bringing more youths into the space will increase the level of fish and seafood being harnessed from our water bodies. Looking at the transactional value on an annual basis, the fisheries sector is worth well over N120billion according to her.
In case you missed it: Nigeria exported agricultural products worth N321.5 billion in 2020, representing a 19.16% increase when compared to N269.8 billion recorded in 2019 and a 6.27% increase compared to N302.28 billion recorded in 2018.
#DigitalSkillsTraining: FG announces conclusion of selection process
Only successful applicants that are contacted by the Ministry are to report at the training venue.
The Federal Government through the Ministry of Youth and Sports disclosed that the selection process for the upcoming Digital Skills Training has been concluded for the #DigitalSkillsTraining from April 11th to 30th, 2021.
This was disclosed in a statement by the Ministry of Youth and Sport on Sunday evening.
“The Federal Ministry of Youth and Sports Development wishes to inform the general public and all Nigerian Youths that the selection process has been concluded for successful applicants for the #DigitalSkillsTraining scheduled for April 11 to 30, 2021,” the statement said.
The Ministry added that only successful applicants that were contacted by the Ministry are to report at the training venue. Those who were not successful but arrive at the training would not be admitted.
“Upcoming #DigitalSkillsTraining Programmes of the Ministry will be widely publicized on youthandsport.gov.ng , on : noya.ng and on the Ministry’s social media handles,” the statement added.
What you should know
Recall that Nairametrics reported in November 2020, that the Ministry of Youths and Sports Development announced it will scale up its digital skills training to cover 500,000 youths across the country after securing funding under the COVID-19 stimulus budget.
Nairametrics | Company Earnings
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- Union Homes REIT proposes final dividend worth N465.03 million for shareholders.
- GT Bank Plc holds FY 2020 investors presentation.
- Cornerstone Insurance Plc notifies stakeholders of late submission of financial statements.
- NSE approves delisting of 11 Plc shares.
- Berger Paints Nigeria Plc reports a 67% decline in Profits in FY 2020.