With the 2021 Finance Amendment Bill currently before the National Assembly, Nigerians and business owners may be in for payment of additional taxes if the proposal sails through.
This is one of the major highlights of the bill which President Muhammadu Buhari transmitted in a letter to the National Assembly December 7.
Among others, President Buhari, in the letter, said the Finance Bill would guide the implementation of the yet-to-be passed 2022 Appropriation Act.
Besides, he said the bill also seeks to support the implementation of the 2022 Federal Budget of Economic Growth and Sustainability by proposing key reforms to specific taxation, customs, excise, fiscal and other relevant laws among others.
Minister explains
Speaking at a stakeholders’ meeting organised by the House of Representatives Committee on Finance Monday in Abuja, Minister of Finance, Budget and national Planning Hajiya Zainab Ahmed said there might be an introduction of new tariffs and levies in 2022 “as the economy was now on a recovery path.”
The minister stressed the need for Nigeria to diversify its revenues from oil to fund critical expenditures, adding that Federal Government’s retained revenue was N4.56 trillion (75 percent of budget) as at September 2021; Federal share of oil revenues – N845 billion (56.3 percent pro-rated performance); N1.31 trillion (117.3 percent above budget) as the federal share of non-oil revenues; N616 billion and N274.4 billion (121 percent and 153 percent of pro-rata targets) of Companies Income Tax (CIT) and Value Added Tax (VAT) and N418 billion Customs collections for the period under review.
The minister said a couple of “reforms and amendments” were recommended in the draft 2021 Finance amendment bill, hinting that more would be added mid 2022.
“Modest changes had been proposed but that more fiscal reforms were still in view as the ministry could not take all the proposals collected from stakeholders.
”Our aspiration is to do a midterm review with a possibility of another Finance Bill in mid-year 2022 to bring in more amendments,” she said.
Mrs Ahmed further said there were ongoing Stamp Duties and VAT-related cases in court against the federal government, hence the reason keep off the areas.
The minister was hopeful that by mid-2022, the legal tussles may have been resolved after which the reforms in those areas could be proposed for parliament to consider.
She also hinted on the possibility of revisiting the antiquated Stamp Duties and Capital Gains Tax for holistic reform by the parliament.
The minister said: “We prepared this draft bill along five reform areas, the first domestic revenue mobilisation, the second is tax administration and legislative drafting, third is International taxation, fourth is financial sector reforms and tax equity and fifth is improving public financial management reform.
“The provision in the draft bill is proposing to amend the Capital Gains Tax Act, Company Income Tax, FIRS Establishment Act, Personal Income Tax, Stamp Duties Act and Tertiary Education Act, Value Added Tax, Insurance Police Trust Fund and the Fiscal Responsibility Act.
“This is to amend the Police Trust Fund Act and the Nigerian Trust Fund Acts, the purpose is to empower the FIRS to collect the Nigerian trust fund levies on companies on behalf of the fund itself.
“Currently, because there is no such provision, the FIRS is unable to start collecting on behalf of the fund. Also, it is to streamline the tax and the levy collection from the Nigerian companies in line with Mr President’s administration ease of doing business policy.”
The bill also sought a five-year jail term and, or a five million naira fine against any official of tax collecting agencies convicted of failing to remit gross taxes, levies, and other revenues, especially where such is received into accounts not approved by the National Assembly.
Other highlights of the bill include but not exhaustive, five percent capital gains tax imposed on shares’ disposal transactions where gains exceed N500 million in 12 calendar months; inclusion of gaming, lottery and gambling companies within corporate tax net; imposition of taxes on oil & gas companies’ dividends as well as midstream & downstream oil and gas companies.
Gbajabiamila
In his remarks, Speaker Femi Gbajabiamila told the gathering that the Bill “seeks to introduce strategic and broadminded, positive reforms that will engender best practices and guarantee interest of the investing public and businesses.”
Gbajabiamila said: “It is instructive to state that the essence of the 2021 bill is to further reposition our finance system to plug wastes, close openings for corruption, create opportunities for employment as well as stimulate stability and growth in our productive sectors, within the wider context of our quest for economic recovery in our country.
“Given the democratic credentials of the House of Representatives under my watch as well as the need to further deepen the credibility of the process through wider participation of stakeholders, this stakeholders meeting has been designed to give Nigerians and critical stakeholders in the industry the ample opportunity to own and drive the process.
“In this hall, we have very proficient professionals and experts, who as stakeholders, investors, development partners and interest groups have submitted memoranda and are ready to make contributions to the bill.
“It is on this backdrop that I charge this stakeholders meeting to extensively scrutinize the templates in the bill in the general interest.
“We must strengthen the institution to strategically check reckless borrowings by ensuring accountability in the use of borrowed funds and ensuring that the borrowings shall be on concessional terms or at relatively low interest rates and subject to the rigorous of legislation.’’
Earlier, Chairman of the committee, Hon. James Faleke (APC-Lagos state) said the major thrust of the bill was to shore up the nation’s economy and ensure proper implementation of the 2022 Budget.
The lawmaker assured every stakeholder would be afforded the opportunity of making inputs into the legislative proposal being passed into law.
Sanwo-Olu
Also on tax matter, Lagos state Governor Babajide Sanwo-Olu has called on members of the Joint Tax Board (JTB), the apex body for all tax authorities in Nigeria, to expand its focus beyond Personal Income Tax to other tax areas.
Speaking at the opening ceremony of the 149th meeting of the JTB held at Eko Hotels and Suites, Victoria Island, Sanwo-Olu said members of the JTB should look towards harmonising the interpretations of the various tax laws to achieve true federalism.
Governor Sanwo-Olu, who was represented by Commissioner for Finance Dr. Rabiu Olowo, also stressed the need for the yearly enactment of the Finance Act to align it with the current economic realities.
He said: “I implore the Joint Tax Board (JTB) to expand its focus beyond Personal Income Tax, to other tax types. While I acknowledge that some of the extant legal or constitutional provisions are not within the purview of the JTB to review or amend, let me say that it is very crucial that your (JTB) unwavering voice is heard in championing the process for change.
“You are one of the most important stakeholders on this journey towards a truly fair, equitable and efficient national revenue collection system.
“As part of this retreat, therefore, I urge you to deliberate and come up with practical solutions on critical revenue issues and fiscal federalism, especially as they relate to Stamp Duties, the regulation of lotteries, Federal/State tax jurisdiction, and the matter of Value Added Tax, which I am aware, is currently subjudice.”
“One step in the right direction for the country, which must be highlighted, is the yearly enactment of the Finance Act. It is aimed at reviewing and updating all existing financial/fiscal legislations of the Federal Government and aligning them with current economic realities and global best practices”, the governor further added.
