Following the recent suggestion of the Chartered Institute of Taxation of Nigeria that the tax regime must always seek to improve obsolete tax laws. It is in this line that Nigeria is set to have another piece of legislation that ensures this reformation.
This piece of legislation is the Finance Bill 2021 recently presented to the National Assembly for consideration and passage by President Buhari to upgrade identified tax laws to reflect modern-day reality.
What you should know about the Bill
In general, the bill proposes key reforms to specific taxation, customs, excise, fiscal, and other relevant laws with a provision for enhanced domestic revenue mobilization efforts to increase tax and non-tax revenues.
Also, the executive document will ensure tax administration and legislative drafting reforms, particularly to support the ongoing automation reforms by the Federal Inland Revenue Service (FIRS).
In specifics, the Finance Bill provides for the amendment of; Capital Gains Tax Act, Income Tax Act, Federal Inland Revenue Service (Establishment) Act 4, Personal Income Tax Act, Stamp Duties Act, Tertiary Education Trust Fund (Establishment, Etc.), Value Added Tax Act, Insurance Act, Nigerian Police Trust Fund (Establishment) Act, National Agency for Science and Engineering Infrastructure, Finance (Control and Management) and Amendment of Fiscal Responsibility Act
In a letter signed by the President, below are the key issues the bill is set to address:
“Upon passage, the bill would accelerate International Tax Reforms to enhance the taxation of non-resident individuals and companies that nevertheless derive profit from Nigeria;
“And implement financial sector reforms to support ongoing capital market reforms relating to securities lending transactions, real estate investment trusts, Init Trust Schemes and the recapitalization of insurance companies,” part of the letter read.
- So far, the current administration has implemented Finance Act 2019 and 2020 that has reformed tax laws across the board.
- Part of reforms brought by these legislative pieces is the review of VAT from 5% to curret 7.5% amongst several waivers to cushion the effect of the Covid-19 outbreak across sectors.