TheSenate at its plenary session of Thursday, 21 November 2019 passed the Finance Bill, 2019. The said Bill seeks to amend seven (7) existing tax and fiscal policy laws (Companies Income Tax Act, 2004; Value Added Tax Act, 2007; Customs and Excise Tariff (Consolidation) Act, 2004; Personal Income Tax Act, 2007; Capital Gains Tax Act, 2007; Stamp Duties Act, 2007; and Petroleum Profit Tax Act, 2004) to reform Nigeria’s tax system for enhanced implementation and effectiveness.
Presenting the report on the Bill, Sen. Solomon Olamilekan Adeola (APC: Lagos), Chairman, Committee on Finance, stated that the initiative was undertaken by the Federal Government to reform the tax system by modifying existing laws to create an enabling business environment and reduce the tax burden for Micro, Small and Medium Enterprises (MSMEs). His submissions also highlighted the objectives of the amendments to include:
- Promoting fiscal equity by mitigating instances of regressive taxation;
- Reforming domestic tax laws to align with global best practices;
- Introducing tax incentives for investment in infrastructure and capital markets;
- Supporting small businesses in line with on-going” Ease of Doing Business Reforms” and;
- Raising revenues for the Government.
Sen. Adeola further spoke on the procedures embarked by the Committee in the conduct of its legislative assignment such as its interactions with the Ministers of Finance, Budget and National Planning; and Comptroller of the Nigerian Customs. The Committee had also requested for stakeholders’ input on the Bill before conducting a Public Hearing on Tuesday, 19 November 2019 and had reviewed existing legislation.
Sen. Adeola further explained that presentations made by stakeholders at the Public Hearing indicated that proposals in the Finance Bill focused on:
- Curbing Base Erosion and Profit Sharing Shifting (BEPS) as proposed by the Organization for Economic Cooperation and Development (OECD);
- Addressing the issue of taxation of industries as critical to the growth and development of Nigeria’s economy;
- Improving the efficiency of Nigeria’s Value Added Tax (VAT) system;
- Expanding VAT coverage by addressing issues of taxation of digital economy, VAT registration thresholds and intangible;
- Subjecting certain imported goods to excise duties in similar manner with locally manufactured products;
- Providing clarity and efficiency in the administration of individual income taxes in Nigeria;
- Preventing the misapplication of provisions of various tax and fiscal laws;
- Increasing revenue generation from Electronic Stamp Duties; and
- Improving revenue by removing the tax exemption granted for dividends or incomes received from companies under the Petroleum Profits Tax Act, 2007;
It would be recalled that the Senate at its sitting of Wednesday, 6 November 2019 referred the said Bill to the Committee on Finance for further legislative scrutiny.