The Federal Executive Council on Wednesday, November 18, approved a Finance Bill, 2020 which it is expected to pass on to the National Assembly for legislative action. The bill is predicated on mitigating the effects of inflation on individuals and businesses by easing tax burdens. According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, the bill is expected to support the implementation of Nigeria’s 2021 budget in relation to fiscal reforms in line with the 2021-2023 Medium Term Framework (MTEF). The bill seeks to among other things, exempt minimum wage earners from paying income tax; exempt businesses with an annual turnover of N25million and below from paying Education tax of 2%, grant tax reliefs to companies that contributed to the COVID-19 relief fund, and make changes in tax laws in relation to customs and excise duty (reduction of duty rate from 35% to 10% on imported tractors and motor vehicles).
It will be recalled that the Finance Act, 2019 had reduced tax rates from 30% to 20% for enterprises with turnover between N25million to N100million and eliminated taxes for enterprises with turnover of N25million and below.