The Senate, on Tuesday, passed the Finance Bill 2020 transmitted to the National Assembly by President Muhammadu Buhari two weeks ago. The passage of the Bill followed the consideration of a report by the Senate Joint Committee on Finance; Customs, Excise & Tariff; Trade and Investment and Public Procurement at plenary by the upper chamber.
Chairman of the Joint Committee, Senator Solomon Adeola (Lagos West), in his presentation, said the Finance Bill 2020 specifically seeks to amend 17 key aspects of extant laws.
According to the him, they are: Capital Gains Act; Companies Income Tax Act; Industrial Development (Income Tax Relief) Act; Personal Income Tax Act; Tertiary Trust Fund Act; Customs and Excise Duties Tariff; Value Added Tax Act; Stamp Duties Act; and Electronic Transaction Levy.
Other areas amended are: Federal Inland Revenue Service (Establishment) Act; Nigeria Export Processing Zone Authority Act; Oil and Gas Export Processing Zone Act; Crisis Intervention Fund; Unclaimed Funds Trust Fund; Companies and Allied Matters Act, 2020; Fiscal Responsibility Act; and Public Procurement Act.
President Muhammadu Buhari, had in a letter dated 25th November, 2020 said the passage of the Finance Bill would support the implementation of the 2021 budget through key reforms in taxation, customs, excise, fiscal and other laws.
The Committee among others recommended the inclusion of free duty and levy for commercial airline operators in line with presidential waivers and approval already granted by the President in the Customs and Excise Tariff Act (CETA).
On the Capital Gain Tax, according to Adeola, the Joint Committee recommended that returns should be filed per year on the 30th of June and 31st December of every Tax year.
“The Committee recommended that the deductions provided for in the Company Income Tax should among others be based on the actual cost of the in-kind donation instead of the value which may be different from what the donor actually incurred.
He added: “The Committee recommends that Section 25(9) of CITA proposed be reduced from 25% to 15% of assessable profits to reduce the amount of deductions available for this voluntary donations made to State or Local Government
“The Committee recommends penalty or fine to be disallowed should be restricted to those imposed by legislation enacted by the National Assembly or States Houses of Assembly with the aim of removing the restriction that will be occasion by the proposal in the Bill with the aim of ease of doing business.
“The Committee recommends that Section 7 of the proposed amendments be deleted and Section 8 of the proposed Bill is the new Section 7.”
On the Industrial Development Income Tax Relief (IDITRA), the Committee recommended “deduction in the Tax Relief periods from initial 5 years to 4 years and additional 3 years to 2 years as this will enable the government to start taxing the relevant organization after a total period of 6 years of tax holiday.”
On the Customs and Excise Tariff Act (CETA), the Committee recommended as follows: The “word ‘service’ be changed to telecommunication in order to be specific on the section been targeted instead of leaving it open to all of the services industries.
“The inclusion of the new duty and levy been proposed and presented at the public hearing in view of the economic hardship by the Minister of Finance and CG Custom Services in order to improve the revenue generation by the Custom Services and reduce loss of revenue to neighbouring countries.
“The inclusion of free duty and levy for commercial airline operators in line with presidential waivers and approval already granted by the President.”
On the Value Added Tax VAT), the Committee recommended that “goods and services exempted should include commercial aircraft, engine, spare part, airline transportation ticket, hire rental on lease of tractors plough and other agricultural equipment or implements should be included as parts of goods and services exempted from VAT.
On Stamp Duty, the Committee recommended that “the Minister in charge of finance subjects to the approval of the National Assembly shall make regulation for the imposition, administration, collection and remittance of the electronic levy.
“The sharing formula of the electronic levy between States and Federal Government with States Government taking 85% and Federal Government being the collecting agent on behalf of the States collects 15%.”
On the Federal Inland Revenue Establishment Act, the Committee recommended “that the service may deploy proprietary technology to automate tax administration process including tax assessment and information gathering provided it gives 30 days’ notice to the tax payer.”
On the Unclaimed Fund Trust Fund, the Committee recommended among others that, “The Debt Management Office shall – maintain a reliable database of all unclaimed dividends and dormant bank balances constituting the debt owed by the Trust Fund which shall be verified and reconciled with the Securities and Exchange Commission, and the Central Bank of Nigeria on a bi-annual basis.
“Liaise with the relevant Registrars of Companies, deposit money banks or the National Deposit Insurance Corporation, as the case may be, to make adequate arrangement for the repayment of the verified interest and capital obligations due to the relevant shareholders, depositors or their legal beneficiaries, as the case may be.
“Prepare and implement a plan for the efficient management of the obligations of the Trust Fund, which plan shall include setting guidelines, modalities and other arrangements, which may include an annual sinking fund, for the servicing of the interest and capital obligations of the Trust Fund.”
On the Fiscal Responsibility Act, the Committee recommended that “the classification of corporation operating surplus as it relates to the cost of revenue ratio and operating surplus of the Minister in charge of finance must upon the approval of the National Assembly may approve for that particular corporation.
“The balance of operating surplus paid into the Consolidated Revenue Funds and any other deductions from the Corporation account which may be effected by regulation issued by the Minister, such regulation must be approved by the National Assembly.
“The quarterly reconciliation carried out by the Ministry of Finance on the corporation, the report of this quarterly reconciliation must be forwarded to the National Assembly.”