THE Presidency has provided insights into the proposed amendments to the provisions of the Finance Bill 2022, which was recently transmitted to the National Assembly for consideration and approval.
In it, it is seeking the amendment of the Fiscal Responsibility Act to enable government to borrow for “critical reforms of significant national impact.”
Top Presidency source who was involved in the drafting of the bill said on Sunday that currently, governments at all tiers are only empowered to borrow for capital expenditure and human development.
“Capital expenditure is defined as spending on an asset that lasts for more than one financial year. Human development and critical reforms are not defined,” the source said.
The Presidency also pointed out that contrary to reports which emerged last week from the National Assembly, there are no provisions in the bill forcing Nigerians to have a Tax ID number in order to operate a bank account.
The source asserted that re- ports erroneously citing the bill had claimed that there is a provision in it that “banks will be required to request for TIN before opening bank accounts for individuals while existing account holders must provide their TIN to continue operating their accounts.”
The source said the news reports are “totally inaccurate as the bill has no such provisions for individuals.”
The bill will make mandatory payment of gross revenue collected by federal ministries, departments or agencies to the federation account or consolidated revenue fund as the case may be accept otherwise authorised by law.
It provides that any officer who violates this requirement may be liable on conviction to imprisonment of up to five years or a fine of N5 million or both.
Other highlights of the main changes in the bill given by the Presidency are: “Capital gains tax at the rate of five per cent to be applicable on disposal of shares in a Nigerian company worth N500 million or more in any 12 consecutive months except where the proceed is reinvested in the shares of any Nigerian company within the same year of assessment. Partial re-investment will attract tax proportionately. Transfer of shares under the regulated Security Lending Transaction is exempted.
“Lottery and Gaming business to be specifically taxable under CITA including betting, game of chance, promotional competition, gambling, wagering, video poker, roulette, craps, bingo, slot or gaming machines and the likes.
“Companies engaged in petroleum operations including Midstream and Downstream operations will not be eligible for exemption on profits in respect of goods exported from Nigeria. Downstream companies were previously eligible under the old Upstream and Downstream classification.
“FIRS to be empowered to assess CIT on the turnover of a foreign digital company involved in transmitting, emitting, or receiving signals, sounds, messages, images or data of any kind including e-commerce, app stores, and online adverts.
“Capital allowance claimable on an asset is limited to the portion used for generating taxable profits. Assets partially used to generate taxable income will be eligible for pro-rata capital allowance except where the proportion of non-taxable income does not exceed 20 per cent of the total income of the company.
“Any capital allowance or unabsorbed allowances brought forward by a small or medium company, other than a company under pioneer status, to be treated as having been claimed and consumed in each such year of assessment.
“The reduction of minimum tax rate from 0.5 per cent to 0.25 per cent of turn- over (less franked investment income) is to be applicable to any two accounting periods between January 1, 2019 and December 31, 2021, as may be chosen by the taxpayer.
“Disputed tax assessment to be in abeyance until determination while undisputed tax assessment is to be paid within 30 days after service of the notice of assessment on the company except otherwise extended by the FIRS. Reference to provisional tax has been deleted in recognition of the well-established self-assessment tax regime.
“Withholding tax on inter- est earned from a unit trust to be treated as final tax. Only WHT on dividend is currently treated as final tax for local companies.
“The deployment of technology to automate tax ad- ministration including assessment and information gathering by FIRS to now include third party technology (previously only proprietary technology may be deployed). A penalty of N50,000 to be applicable where a company fails to grant access to FIRS in addition to N25,000 for each day the failure continues.
“FIRS to be the primary agency of the Federal Government responsible for the administration, assessment, collection, accounting and enforcement of taxes and levies due to the Federation, the Federal Government and any of its agencies except otherwise authorised by the Finance Minister.
“Any person or agency of the Federal Government must refer matters requiring tax investigation, enforcement and compliance to the FIRS. Relevant officers, who violate the rule to be liable to a penalty of N10 million and/or five years imprisonment on conviction.
“Deductible life assurance premium for personal income tax purposes to exclude a contract for a deferred annuity.
“The Finance Minister, subject to the approval of the National Assembly, shall make regulations for the im- position, administration, collection, remittance, including distribution of arrears of stamp duty and Electronic Money Transfer levies collected between 2015 and 2019 fiscal years.
“Tertiary Education Tax to be payable within 30 days of service of assessment (currently 60 days).
“Non-residents making taxable supplies to recipients in Nigeria to have the primary obligation to charge collect and remit VAT to FIRS. The VAT withholding obligation of Nigerian recipients is now limited to where the non-resident or its appointed agent fails to collect the VAT.
“The exemption from VAT registration and compliance obligation applicable to small companies with annual turn- over less than N25 million to exclude companies engaged in upstream petroleum operations regardless of turnover.
“Appointment of the FIRS to assess, collect and enforce the payment of Nigerian Police Trust Fund levy. The Act enacted in 2019 imposed a tax of 0.005 per cent on the net profit of companies operating in Nigeria.
“Amendment of the National Agency for Science and Engineering Infrastructure Act to remove the requirement for commercial companies to pay a levy of 0.25 per cent of turnover annually to the Fund. Primary sources of fund to be limited to one per cent of the Federation Account.”
Meanwhile, barring last-minute changes, Minister of Finance, Budget and National Planning, Hajia Zainab Usman, is expected to appear before the House of Representatives Committee on Finance today, to elucidate on the proposed Finance Bill.
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