FINANCE BILL OF NIGERIA 2019

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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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