The Senate has read for the third time and passed, the Finance Bill, 2020 which seeks to amend the Capital Gains Tax Act; Companies Income Tax Act; Industrial Development (Income Tax Relief) Act; Personal Income Tax Act, Tertiary Education Trust Fund (Est) Act; Customs and Excise Duties, etc. (Consolidated) Act; Value Added Tax Act; Stamp Duties Act; Electronic Transaction Levy; Federal Inland Revenue Service (Est) Act; Nigeria Export Processing Zone Authority Act; Oil and Gas Export Processing Zone Act; Crisis Intervention Fund; Unclaimed Funds Tryst Funds; Companies and Allied Matters Act; and Fiscal Responsibility Act.

Presenting the report of the Joint Committees on Finance; Customs, Excise and Tariff; Trade and Investment and Public Procurement, the Chairman, Sen. Solomon Adeola Olamilekan (APC: Lagos) informed lawmakers that the Finance Bill, 2020 is aimed at supporting the implementation of the 2021 Budget by proposing amendments to the aforementioned Acts in line with the fiscal reforms and finance management of the Federal Government.

According to Sen. Olamilekan, the Finance Bill, 2020 allows for the following:

• Adoption of a Counter-Cynical Fiscal Policy that focuses on:

1. Responses to current economic challenges of COVID-19 and the decline in Oil Prices and Revenue.

2. Deferring increase in tax rates until domestic economy sufficiently recovers.

3. Reducing compliance burden on taxpayers in line with the Ease of Doing Business.

• Reforming Fiscal Incentives in order to:

1. Reduce proliferation of fiscal incentives by carefully assessing Cost vs. Benefit of Tax Incentives.

2. Prioritize job creation, growth and investment (e.g. reduce taxation of capital by cutting Minimum Tax Rate on Companies from 0.5% to 0.25%).

• Close Coordination of Monetary, Trade and Fiscal Policies through the:

1. Harmonization of existing tax incentives for lending to Agriculture following the recent reduction in moratorium and interest rate for Agriculture and sectoral loans.

2. Reformation on Stamp Duty levy on banking transactions.

3. Reformation on Unclaimed Dividends and Unclaimed Bank Balance.

Furthermore, he noted that the Joint Committee had conducted a Public Hearing on Thursday, 10 December 2020 to avail stakeholders and the general public the opportunity to make input on the Bill, after which the Committee adopted the following as its recommendations:

1. Companies Income Tax Act
   • That the value of in-kind donation made by the government or any of its designated agency should be different from the actual cost incurred by the donor.
   • That the 25% of assessable profit is too high for a voluntary donation and should be reduced to 15%.
   • That the penalties or fines imposed should be restricted to those approved through a legislation enacted by the National Assembly and State Houses of Assembly.
   • That the proposed amendment to section 7 be deleted.
2. Industrial Development (Income Tax Relief)
   • That the deduction in Tax Relief periods for an initial period of 5 years be reduce to 4 years and the additional 3years be reduced to 2years.

3. Custom and Excise Tariff Act
   • That in line with the Presidential directives on waivers and approvals, there should be an inclusion of free duty and levy for commercial airline operators

4. Value Added Tax
   • That goods and services exempted from VAT should include commercial aircraft, engine, spare parts, airline transportation ticket, hire rental on lease on tractors and other agricultural equipment.

5. Stamp Duty
   • That the Minister of Finance, subject to the approval of the National Assembly shall make regulations for the imposition, administration, collection and remittance of electronic levy.

6. Federal Inland Revenue Service Act
   • That FIRS may deploy technology to automate tax administration process including tax assessment and information, provided that a 30-day notice is given to the taxpayer.

7. Unclaimed Fund Trust Fund
   • That the governing council shall include the Minister of Finance as Chairman; Establish Private Sector Experts as Co-Chairman; Governor of the Central Bank of Nigeria; Director General of SEC; Managing Director of NDIC; Two Representatives of the Shareholders Association; Representatives of Bankers Committee; Representatives of the Registrar of Companies; and Director General of the Debt Management Office as Secretary/Head of Administration of the Trust Fund.

8. Fiscal Responsibility Act
   • That the balance of operating surplus paid into the Consolidated Revenue Fund and any other deductions from the account issued by the Minister of Finance must be approved by the National Assembly.

It would be recalled that the Senate at its plenary session of 1^st December 2020 had acknowledged receipt of the Finance Bill, 2020 transmitted by the President, Muhammadu Buhari

Click here to view the full report of the Committee