On December 28, 2022, the National Assembly passed Nigeria’s 2023 Budget and the Finance Bill. While the President assented to the budget, the National Assembly transmitted the Finance Bill to the President on 3rd January 2023 for his assent. This bill is yet to receive assent. The Finance Bill is a major plank for determining the extent of government revenues for the fiscal year, as it amends provisions of various finance-related laws. The current Finance Bill contains provisions amending 11 existing Acts. These include the Capital Gains Tax Act, the Companies Income Tax Act, the Customs, Excise, Tariff, etc (Consolidation) Act, the Federal Inland Revenue Service Establishment Act, Personal Income Tax Act, Petroleum Profit Tax Act, Stamp Duties Act, Value Added Tax Act, Tertiary Education Tax Trust Fund Act, Corrupt Practices and other Related Offences Act and the Public Procurement Act. Some of the notable amendments are discussed below.
The Finance Bill amends the Tertiary Education Tax Trust Fund Act, to increase the tertiary education tax from 2.5% to 3% of the assessable profits of all companies registered in Nigeria each year. However, the Academic Staff Union of Universities (ASUU) is demanding an increase of Education tax to 10%, to address the infrastructure deficit in tertiary education institutions. It will be recalled that the 2021 Finance Act increased the rate of education tax from 2% to 2.5%. According to experts in the private enterprise industry, this is another increase too soon, in addition to multiple taxes and levies that companies are faced with. They are also of the opinion that improvements in terms of taxation should focus on widening the tax base, efficiency in tax governance and administration.
The 2023 Finance Bill also amends the Federal Inland Revenue Service Establishment Act to change the name of the Service to ‘Federation Revenue Service’. Additionally, it provides a new section 3 and 9 on the establishment and composition of a Governing Board and Technical Committee of the Board, respectively for the Service. The Finance Act also amends several sections of the Federal Inland Revenue Service Establishment Act to change the term ‘Executive Secretary’ to ‘Commissioner General’ of the Service. This is also reflected in the new section 11 of the Act which provides for the Commissioner General of the Service and the insertion of a section 11A which provides for Commissioners of the Service.
Several sections of the Petroleum Profit Tax Act are amended by the Finance Bill, such as the Interpretation section, which describes the word ‘Commission’ to mean the Nigerian Upstream Petroleum Regulatory Commission, established under the Petroleum Industry Act, 2021. It also provides a new section 51 which provides a penalty for violation of any provisions of the Act, for which no penalty is specifically provided. Other amendments are contained in section 10 of the Act that deals with Deductions, section 23 that deals with Additional Chargeable Tax payable in certain circumstances, section 30 on Preparation and Delivery of Accounts and Particulars, section 52 which stipulates the penalty for making incorrect accounts, among others.
The 2023 Finance Bill has some controversial provisions as mentioned above, including the provision escalating taxes by companies in a period when companies are reeling from the pains of a declining economy. Most have criticised this additional burden as insensitive or even unrealistic.
Given that the Finance Bill defines the extent of government revenue for its budget, it is unclear why the President has delayed signing it.