In its quest to reform obsolete tax laws and propose new ones that reflect modern-day realities, the newly proposed Finance Bill 2021 is already making the rounds a few days after its transmission to the National Assembly by President Buhari.
Dwelling on its proposal, the Finance Bill 2021 proposes a mandatory provision of the Tax Identification Number, NIN before bank account holders can open a new account or even operate an already existing account.
Beyond the proposal, the legislative piece gives legal backing to commercial banks to demand as a requirement to open a new account or operate an existing account.
Also, the Finance Bill specified that the only channel recognized for the taxpayer to communicate with the tax authority is through electronic mail correspondence.
The details of this provision were revealed recently on the Floor of the House of Senate where the Leader of the Senate, Yahaya Abdullahi expounds that the details of the new Finance Bill 2021.
In his words
“Banks will be required to request for Tax Identification Number before opening bank accounts for individuals while existing account holders must provide their TIN to continue operating their accounts.”
“The conditions attached to tax exemption on gratuities have been removed.
“Therefore gratuities are unconditionally tax exempt.
“The duties currently performed by the Joint Tax Board as relates to administering the Personal Income Tax Act will now be performed by the Federal Inland Revenue service.
“This seems to be an error in the process of amendments to replace the word “Board” as it appears in Federal Board of Inland Revenue.”
“The penalty for failure to notify FIRS of change in company address to be reviewed upwards to ₦50,000 for the first month of default and ₦25,000 for each subsequent month of default.
“This penalty also covers failure to notify FIRS of permanent cessation of trade or business.
“Quite significantly, the Finance Bill seeks to introduce sweeping changes to the tax laws covering seven different tax laws.
“Many of the changes are expected to have positive impacts on investments and ease of paying taxes, especially for MSMEs.
“Going forward, we hope that changes to the tax laws will be on an annual basis to ensure that Nigeria’s tax system continues to evolve in line with economic conditions”
Other Highlights of the Bill
- The bill amongst other highlights prescribes a 10 percent penalty for failure to deduct tax.
- On the Personal Income Tax Act, the document clarified that pension contributions no longer require the approval of the Joint Tax Board to be tax-deductible.
- The bill seeks to remove the tax exemption on withdrawals from pension schemes except the prescribed conditions are met.