2019 Finance Bill: 20 Sweeping Changes To Nigeria's Tax Laws That May Affect You

Friday, November 08, 2019   /03:28 PM / By Taiwo Oyedele* Tax Partner, PwC Nigeria/ Header Image Credit: PwC

A Bill to amend various tax laws in Nigeria is currently undergoing legislative process at the National Assembly. The 2019 Finance Bill which was presented to the Legislature by President Muhammadu Buhari along with the 2019 Budget seeks to introduce sweeping changes.

Below are some of the important changes you should know about:

1. Excess dividend tax to apply only to untaxed distributions other than profits specifically exempted from tax and franked investment income

2. Small businesses with turnover less than N25m to be exempted from Companies Income Tax

3. A lower CIT rate of 20% to apply to medium-sized companies with turnover between N25m and N100m

4. Commencement and cessation rules modified to eliminate overlaps and gaps to avoid double taxation and complication during commencement

5. Minimum tax provisions amended to 0.5% of turnover and exemption only applies to small companies (less than 25m turnover), so non-resident companies will now pay minimum tax

6. Insurance companies can now carry forward tax losses indefinitely, deduct reserve for unexpired risks on time apportionment bases while special minimum tax for insurance has been abolished

7. Bonus of 2% of tax payable (medium-sized companies) and 1% for large companies for early payment of CIT

8. Introduction of thin capitalisation of 30% of EBITDA for interest deductibility. Any excess deduction can be carried forward for 5 years

9. Deemed tax presence for non-residents with respect to imported technical and management services now taxable at a final WHT rate of 10%

10. Any expense incurred to earn exempt income now specifically disallowed as a deduction against other taxable income

11. Dividend distributed from petroleum profits now to suffer 10% withholding tax

12. Banks to request for Tax Identification Number (TIN) before opening bank accounts for individuals, while existing account holders must provide their TIN to continue operating their accounts

13. Email correspondences to be recognised for communicating with tax authorities

14. The meaning of supply and definition of goods and services has been expanded to cover intangible items other than land, among others

15. Specific requirement for VAT deregistration for discontinuing operations

16. Introduction of VAT reverse charge on imported services

17. VAT registration threshold of N25 million turnover in a calendar year to be introduced

18. Remittance of VAT now to be on cash basis, that is, difference between output VAT collected and input VAT paid in the preceding month

19. Compensation for loss of employment below N10m to be exempted from CGT

20. Stamp duty on bank transfer to apply only on amount from N10,000 and above. Transfers between the same owner's accounts in the same bank also to be exempted

Download Here - 2019 Finance Bill

About The Author

Taiwo Oyedele is the Head of Tax and Corporate Advisory Services at PwC Nigeria. He has been in the forefront as a thought leader and prominent speaker on key accounting and tax issues including the tax implications of IFRS Adoption and Transfer Pricing. Taiwo writes articles in leading national newspapers, professional journals, international magazines and newsletters. He is a regular presenter and a highly sought after public speaker delivering over 200 speeches and presentations around the world in the past 3 years alone. Taiwo is the Head of PwC Tax Academy, Dean of the Direct Taxation Faculty of the Chartered Institute of Taxation of Nigeria, member of the Nigerian Taxation Standards Board and a member of the Taxation and Fiscal Policy Management Faculty Board of ICAN. He can be reached via   @taiwoyedele 

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