The Finance Bill, 2020 on Wednesday passed first and second readings in the Senate, a day after President Muhammadu Buhari presented it.
Section 49 of the Finance Act has been amended to make the provision of Tax Identification Number (TIN) mandatory for persons intending to open a bank account for business operations.
The executive bill seeks to support the implementation of the 2021 budget by proposing key reforms to specific taxation, customs, excise, fiscal and other laws. It also seeks to amend the Capital Gains Tax Act; Personal Income Tax Act; and Value Added Tax.
The piece of legislation scaled second reading in the Red Chamber after the lawmakers debated its general principles.
Section 4 of the VAT Act has been amended by increasing the value added tax payable by consumers from 5% to 7.5%.
Section 19 increased the penalty payable by a taxable person for non-remittance within the specified period from 5% to 10%.
Under section 28, the penalty for failure to give notice of change of address or permanent cessation of business was increased from N5000 to N50,000 in the first month and N25000 in subsequent months.
The bill proposes a new section 8 to cater for the registration of a taxable person upon commencement of business.
The new section 15 of VAT introduces a threshold for VAT compliance. Thus companies with turnover of N25 million or more shall render their tax on or before the 21st of every month.
The bill proposes to amend section 36(2) of the Capital Gains Tax Act to the extent that exemption on tax liability for compensation for loss of office which was hitherto limited to N10,000 is now extended to N10m.
It also proposes section 32, which provides that no tax shall apply to any trade or business transferred to a Nigerian company for the purposes of better organization of that trade or business etc.
This tax exemption is however not applicable if the acquiring company subsequently disposes of the assets within one year.
The Senate Leader Yahaya Abdullahi said it has become imperative that the Nigerian tax legislation is updated frequently to respond to the challenges of today’s business environment.
“Tax education and sensitization of the public would go a long way in achieving compliance from taxpayers,” he said.
The Senate President Ahmad Lawan, after scaling second, referred the bill to the Senate Committees on Finance, Customs and Public Procurement to revert in one week.