President Muhammadu Buhari, on Monday, signed the Finance Bill, which, among others, seeks to increase the value-added tax (VAT) from five per cent to 7.5 per cent.
In a statement via his Twitter handle, Buhari said “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 and raise government revenues.” the tweet reads.
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.
Here are some facts about the bill.
1. Banks will request Tax Identification Number (TIN) before individuals are allowed to open bank accounts. Existing account holders must provide their TIN to be able to operate their accounts. #PublicFinanceBill
2. Non-residents who provide imported technical and management services in Nigeria will be taxable at a final Witholding Tax rate of 10%. #PublicFinanceBill
3. Dividends distributed from petroleum profits will attract 10% withholding tax. This will affect those with investments in oil and gas investments. #PublicFinanceBill
4. A minimum tax (mainly applies to those without profit & unable to pay CIT) provisions of 0.5% of turnover will apply to all companies and exemption will only apply to small companies (less than 25m turnover). Non-resident companies will now pay minimum tax. #PublicFinanceBill
5. Small businesses with turnover less than N25m to be FULLY exempted from Companies Income Tax (CIT) & entities with less than N25m in turnover are exempted from VAT registration. #PublicFinanceBill
6. A CIT rate of 20% applies medium-sized companies with turnover between N25m and N100m. It’s a boost for SMEs. #PublicFinanceBill
7. The law will now allow use of EMAILS as a communication medium with tax institutions – FIRS & State Revenue Agencies. #PublicFinanceBill
8. Early payment of Company Income Tax is incentivised with deduction of 2% of tax payable (medium-sized companies) and 1% for large companies. #PublicFinanceBill
10. Stamp duty on bank transfers will apply to amounts of N10,000 and above. Transfers between the same owner’s accounts in the same bank will be exempted. Electronic bank transfers included.