FINANCE ACT 2020 OF NIGERIA
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FINANCE ACT 2019
EXPLANATORY MEMORANDUM
This Bill is to among other things amend the following tax provisions and make them more responsive to the tax reform policies of the Federal Government and enhance [their] implementation and effectiveness.
(a) Companies Income Tax Act, Cap. C21, Laws of the Federation of Nigeria, 2004 (as amended to date)
The Bill seeks to amend the provisions of the Companies Income Tax Act to, amongst other things, curb Base Erosion and Profit Shifting (BEFS) as proposed by the Organisation for Economic Cooperation and Development (OECD) and thereby broaden the triggers for domestic taxation of income earned by non-resident companies in Nigeria through dependent agents and via online market platforms.
The Bill also seeks to address the taxation of industries, such as insurance, start-ups and the capital markets, evaluated by the Federal Government of Nigeria as critical to the growth and development of the Nigerian economy with a view to stimulating activities in those sectors and fostering overall economic growth.
(b) Value Added Tax Act, Cap VI, LFN 2007 (as amended)
In line with global best practice[s], this Bill proposes to improve the efficiency of the Nigerian VAT system taking into consideration recommendations from various stakeholder groups. In addition to simplifying the VAT landscape, the Bill also seeks to expand VAT coverage by addressing some critical issues, such as taxation of the digital economy, VAT registration thresholds and intangibles.
(c) Customs and Excise Tariff Etc. (Consolidation) Act, Cap C49, Laws of the Federation of Nigeria
In a bid to create a level playing field for local manufacturers, this Bill wishes to subject certain imported goods to excise duties in similar manner as their locally manufactured counterparts.
(d) Personal Income Tax Cap. P8, LFN 2007 (as amended)
The Bill also seeks to provide clarity and efficiency in the administration of the individual income taxes in Nigeria.
(e) Capital Gains Tax Act Cap c1, LFN 2007
The Bill also covers the taxation of business combination and seeks to prevent abuse of pro vision of the Act on group restructuring.
(f) Stamp Duties Act, Cap 58, LFN 2007
The Bill also seeks to increase revenue generation from duties on electronic stamps.
(g) This Bill seeks to improve revenue by removing the tax exemption granted for dividends or income received from companies charged under Petroleum Profits Tax Act.
ARRANGEMENT OF SECTIONS
PART I – DIRECT TAXES
Companies Income Tax
1. Charge of tax
2. Identification of a company
3. Nigerian Companies
4. Insurance Companies
5. Payment of dividend by Nigerian companies
6. Nigerian dividends received by companies other than Nigerian companies
7. Profits exempted
8. Deductions allowed
9. Deductions not allowed
10. Basis for computing assessable profits
11. Total profits from all sources.
12. Payment of minimum tax
13. Gas utilisation (downstream operations)
14. Rates of tax
15. Replacement of obsolete plant and machinery
16. Dividend and tax on interim dividends paid by Nigerian companies
17. Self-assessment of tax payable
18. Returns and provisional account
19. Time within which tax (including provisional tax) is to be paid
20. Deduction of tax from interest etc.
21. Deduction of tax from dividend
22. Deduction of tax at source
23. Interpretation (CIT)
24. Third Schedule
25. Seventh Schedule – Deductible Interest
Petroleum Profits Tax
26. Restriction of effect of the Personal Income Tax Act and other Acts.
Personal Income Tax
27. Persons on whom tax is to be imposed
28. Deductions allowed
29. Personal relief and relief for children and dependants
30. Information to be provided by bankers
31. Revision in case of objection
32. Penalty for failure to deduct tax
33. Third Schedule
34. Interpretation (FIT)
PART II – INDIRECT TAX
Value Added Tax
35. Taxable goods and services
36. Rate of Tax
37. Registration and deregistration requirements
38. Registration by non-resident companies
39. Taxable person to render returns
40. Remission of tax
41. Effect of non-compliance
42. Value Added Tax Technical Committee
43. Failure to notify change of address
44. Failure to register
45. Failure to submit returns
46. Business sold or transferred
47. Interpretation
48. First Schedule (VAT)
Customs and Excise Duties
49. Goods liable to Excise Duty
PART III – Capital Gains tax
50. Exemption of tax on gains arising from take-overs
51. Personal Injury
52. Interpretation (CGT)
PART IV – Stamp Duties
53. Interpretation
54. Provisions as to duty upon receipts
55. Certain forms of receipts not dutiable
55. Schedule (Stamp Duties)
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