The Finance Act 2021 was signed into law on December 31, 2021 by President Muhammadu Buhari, alongside the Appropriation Act 2022. The Federal Government since 2019, has submitted Finance Bills alongside the yearly Appropriation Bills, to support the implementation of annual national budgets. These finance bills amend several provisions of taxation, customs, excise, fiscal and other relevant laws. The Finance Act 2021 introduced several amendments to thirteen laws. Some of these amendments are discussed below. <\/p>\n\n\n\n
The Finance Act has amended the Fiscal Responsibility\nAct 2007, to expand the government\u2019s borrowing powers and debt management. It\nprovides that government at all tiers can borrow to \u201cundertake critical reforms\nof significant national impact\u201d in addition to borrowing for capital\nexpenditure and human development. In addition, the Act previously provided\nthat the government should borrow on concessional terms with low interest rate\nand with a reasonable long amortisation period. This has now been amended to\nallow for the government to borrow on \u201cconcessional terms or at relatively low\ninterest rates and with a reasonably long amortisation period.\u201d <\/p>\n\n\n\n
The Finance Act amends the Companies Income Tax Act\n(CITA), Laws of the Federation of Nigeria (LFN) 2004 by empowering the Federal\nInland Revenue Service (FIRS) to administer the taxation of non-resident\ncompanies with significant economic presence in Nigeria, engaged in digital\nservices and provision of technical, management, consultancy or professional services\nto Nigerian customers. The income tax payable by such entities will be based on\na fair and reasonable percentage of the turnover attributable to their\npresence. The Finance Act further amends the Companies Income Tax Act to\nintroduce income tax on the profits of lottery and gaming companies, among\nseveral other amendments to the CITA. <\/p>\n\n\n\n
One of the amendments introduced by the 2021 Finance\nAct is an excise duty on non-alcoholic, carbonated and sweetened beverages at\nthe rate of N10 per litre, in the Customs and Excise Tariffs Act LFN 2004.\nFurthermore, the Finance Act has increased the rate of Tertiary Education tax\npayable by companies in Nigeria from 2% to 2.5% of their assessable profit by\namending the relevant provision of the Tertiary Education Trust Fund Act 2011.\nIn addition, the timeline of 60 days within which companies are expected to pay\nthis tax has been reduced to 30 days of receipt of a notice of assessment from\nFIRS. Small companies (with an annual turnover below N25 million) are still exempt\nfrom paying this tax. <\/p>\n\n\n\n
The Finance Act\u2019s amendment to the Capital Gains Tax\nAct LFN 2004 now provides that gains accruing from the disposal of stocks and\nshares in a Nigerian company shall be taxed at the rate of 10% except in\ncertain circumstances stipulated in the amendment. Also, the Nigerian Police\nTrust Fund Act 2019 is amended to empower the FIRS to assess, collect, account\nand enforce the payment of the stipulated 0.005% of the net profit of companies\nin Nigeria, into the Police Trust Fund. <\/p>\n\n\n\n
The Federal Inland Revenue Service (Establishment) Act\n2007 has also been amended by the Finance Act 2021, to expand the data\nprotection obligation on officials of FIRS who have access to taxpayer\ninformation, to regard and deal with such information as secret and\nconfidential. The penalty for failure to do so includes payment of fine,\nimprisonment or both. A further amendment to the Act provides that the FIRS may\ndeploy technology to automate the tax administration process for assessment and\ninformation gathering, provided that it gives 30 days\u2019 notice to the taxpayer.\nIt further stipulates an administrative penalty for any person who fails to\ngrant access to the FIRS after this period and any period of extension granted\nby the Service. <\/p>\n\n\n\n
It is expected that the application of all the\namendments introduced by the Finance Act will foster the implementation of the\nFederal Government\u2019s 2022 Budget of Economic Growth and Sustainability.\nHowever, tax experts have noted that the practice of amending taxation laws on\na yearly basis as introduced by the Buhari administration, is capable of\ncomplicating the taxation system and posing a challenge to the tax\nadministration authorities, as well as individual and corporate taxpayers. <\/p>\n","protected":false},"excerpt":{"rendered":"
The Finance Act 2021 was signed into law on December 31, 2021 by President Muhammadu Buhari, alongside the Appropriation Act 2022. The Federal Government since 2019, has submitted Finance Bills alongside the yearly Appropriation Bills, to support the implementation of annual national budgets. These finance bills amend several provisions of taxation, customs, excise, fiscal and […]<\/p>\n","protected":false},"author":2,"featured_media":2465,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-2458","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/2458","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/comments?post=2458"}],"version-history":[{"count":2,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/2458\/revisions"}],"predecessor-version":[{"id":2472,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/2458\/revisions\/2472"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/media\/2465"}],"wp:attachment":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/media?parent=2458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/categories?post=2458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/tags?post=2458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}