Senate passes Finance Bill two weeks after Buhari transmitted it
By Jeph Ajobaju, Chief Copy Editor
Senators have finally passed the Finance Bill 2021 two weeks after President Muhammadu Buhari transmitted it to the National Assembly (NASS) on December 7 and after the Federal Executive Council (FEC) ratified it the following day.
The passage followed the consideration of a report by the Joint Committee on Finance; Customs, Excise and Tariff; Trade and Investment.
Joint Committee Chairman Solomon Adeola said in his presentation that the bill seeks to support the implementation of the 2022 Federal Budget of Economic Growth and Sustainability.
The bill proposes key specific taxation, customs, excise, fiscal, and other relevant laws. A total 12 out of the 39 clauses in the Finance Bill were amended.
The bill seeks to promote fiscal equity, align domestic tax laws with global best practice, introduce tax incentives for infrastructure and capital markets, support small businesses and promote increase government revenue.
“The Finance Act 2020 was predicated essentially on having no new taxes and no new incentives due to the COVID-19’s impact on the economy as such it was structured across four broad thematic areas; Enacting counter cyclical measures and crisis intervention initiatives; Tax, fiscal responsibility, and public procurement reforms; Reforming fiscal incentives policies for job creation; Ensuring closer coordination of monetary, trade and fiscal policies; and Enhancing tax administration,” Adeola said.
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Committee recommendations
The Joint Committee
- Recommended 5 per cent Capital Gains Tax on shares’ disposal transactions where gains exceed N250 million in 12 calendar months.
- Recommended that Gaming and Lottery Companies be taxable, as well as Oil and Gas Companies.
- Underscored the need for Midstream and Downstream Oil and Gas Companies to be made liable to corporate tax without exemptions for firms exporting goods to earn foreign exchange.
- Observed that doing so would prevent Double-Dipping by Gas Utilisation Companies such that they cannot claim both (1) three-year Tax Holidays; as well as (2) Petroleum Profit Tax Act Incentives or (3) Pioneer tax Holidays under IDITRA.
- Advocated for qualifying Capital Expenditure rules for small and pioneer companies, to prevent double dipping by mandating that companies cannot deduct qualifying Capital Expenditure to reduce their taxable profits where the relevant qualifying Capital Expenditure is used to generate tax exempt income.
- Sought more powers for the Federal Inland Revenue Service (FIRS) to collect NPTF levies on companies on behalf of the fund and to streamline tax levy collection from companies in line with ease of doing business reforms.
- Stressed the need for the government to ensure that the FIRS deploys both proprietary and third-party tech apps to collect information from taxpayers, enhance confidentiality and non-disclosure, and to enable them investigate tax evasion and other crimes and sanction non-compliant tax payers.
- Advocated for the FIRS to be empowered to assess Non-Resident Firms to tax on fair and reasonable turnover basis on Turnover earned from digital services to Nigerian customers, with a further mandate to appoint persons to collect and remit non-resident taxes.
- Demanded reforms on securities lending transactions, minimum Tax for Insurance Companies and companies in general, Taxation of Unit Trust Income, Real Estate Investment Trust, and Insurance Companies Capitalization by NAICOM in line with Tax Equity.
- Urged the government to mandate the FIRS as Principal Tax Revenue Collection Agency to collaborate with other law enforcement MDAs in streamlining Tax Collections by enhancing Public Financial Management reforms.
- Said this will reduce revenue leakages and better track actual expenditure to revenue performance in line with the Constitution and Fiscal Rules and other Extant Money Acts.
- Called for the diversification of revenue from oil to other sectors.
- Demanded an increase of 0.5 per cent in educational tax.
- Pushed for close monitoring of unfolding development and policies on VAT, Tax Incentives, Projected increase Tariff on Tobacco, Alcohol and Carbonated drinks to fund vital expenditure on Health, Education and Security, with possible introduction of new taxes, tariffs and levies as the economy recovers.
The Senate also passed a bill to amend the 2021 Appropriation Act.
The bill, sponsored by Senate Leader Yahaya Abdullahi, scaled Second and Third readings after it was considered at plenary.
The bill extends the implementation of the Capital aspect of the Appropriation Act 2021 from December 31, 2021 to March 31, 2022.
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