The searchlight is beamed once again on the Finance Act 2020, this time not for its laudable inventions and fixes to varying economic issues but a clear pointer that after all said and done, perceptions have to match realities as the Fiscal Policy Reforms Committee recently revealed that this period of pre-implementation of the 2021 Appropriation Act will be seized as a check and balance window to correct any perceived errors in the much talked about act of legislation.

To buttress the claim of inherent glitches in the Finance Act 2020, recall that the Federal Government introduced a 50 percent reduction in the minimum tax rate. The reduction was from 0.5 percent to 0.25 percent, applicable for the Years of Assessment (YOA) from Jan. 1 to Dec. 31, 2020. The move was initially aimed at reducing the effect of the COVID-19 pandemic on businesses but it eventually translated to taxpayers claiming the excess payments on their 2019 accounts is expected to have been filed with the Federal Inland Revenue Service (FIRS).

Taxmobile.Online gathered from Mr. Bode Oyetunde, Senior Special Assistant to the President on Finance and Fiscal Matters and Secretary of the committee during the Finance Act 2020 virtual stakeholder engagement and consultation held yesterday, Tuesday 2nd February 2021 that excess payment would have been for companies with financial years ending between July 1, 2019, to June 30, 2020.

The Finance Minister’s led team is saying that errors detected in the 2020 Finance Act will be corrected.

Responding to this irregularity, he reiterated that,

“There may be some fiscal enactment before the middle of the year to adjust the 2021 Appropriation Act and if so, the Fiscal Policy Reforms Committee will take the opportunity to correct any perceived errors in the Finance Act 2020.

“We use criminal law to back tax provisions and the constitution does not allow us to penalise people for crimes committed that are not crimes at the time they were performed,” he said.

On the flipside

Mr. Sanya Gbonjubola, Director, Tax Policy and Advisory Department, FIRS, said there would be no refund concerning the issue of excess payment.

His response during the virtual session,

“Sometimes, things are not what they appear to be, particularly when it comes to matters related to tax law.

“We need to understand how the tax system works. Let me just say right away that there will be no refund.

“The proponent of that clause was to give relief for two years to taxpayers in view of what everyone is facing. “In couching the law, there was some error. What has happened is that the language of the law has effectively reduced the two years to one year.

“It happens that tax laws are never made in retrospect and any provision you make in retrospect, whether against or for the taxpayer, is ab initio.

“So what has happened is the intended two years has shut down to one year,” Gbonjubola explained. He, however, expressed optimism that the amendment would come, hopefully, when looking at the 2021 Finance Act, so that taxpayers can still enjoy that one year that was intended by the policy.” 

You should also know that…

The Federal Government approved sometime in November 2020 the Finance Bill to support the 2021 budget as it was said that there were no plans to increase the tax burden on Nigerians.

The Finance Act 2020 also provides that the federal government can borrow from the unclaimed dividends and dormant account balances under the Unclaimed Funds Trust Fund.

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