Tax Relief

    Introduction: The Act aims to promote economic growth, support specific industries, and encourage investment in certain sectors through various tax incentives and reliefs. As an audit firm dedicated to educating and empowering our prospective customers, this article provides a comprehensive analysis of the tax incentives and reliefs introduced by the Nigeria Finance Act 2020. Understanding these provisions is crucial for businesses and individuals to optimize their tax planning strategies, reduce tax liabilities, and take advantage of the opportunities offered by the government.   Tax Credit for Infrastructure Investments: The Finance Act 2020 introduced tax credits for companies that invest in qualifying infrastructure projects. Companies investing in roads, bridges, power generation, and other eligible infrastructure can claim tax credits as incentives. This measure aims to boost infrastructure development and attract private sector participation in critical projects.   Incentives for Agriculture and Agro-Allied Activities: The Act provides tax incentives for businesses engaged in agriculture and agro-allied activities. Companies operating in these sectors may benefit from reduced tax rates, tax exemptions, and other reliefs to support food production, agro-processing, and rural development.   Deductions for Contributions to the National Housing Fund: The Finance Act 2020 introduced deductions for contributions made by employees and employers to the National Housing Fund (NHF). Employees and employers can claim these deductions to encourage affordable housing and support the government’s efforts to address the housing deficit.   Tax Exemptions for Small Companies: To promote small business growth, the Act provides tax exemptions for companies with an annual turnover of less than N25 million. These small companies are exempt from income tax, reducing the tax burden on startups and SMEs and fostering entrepreneurship.   Incentives for the Creative Industry: The Finance Act 2020 offers incentives to businesses operating in the creative industry. Eligible activities such as music, film, fashion, and information technology may benefit from reduced tax rates and tax holidays to support the growth of the creative sector.   Incentives for Companies in Pioneer Industries: Companies operating in designated pioneer industries can enjoy tax holidays, granting them relief from corporate income tax for specific periods. The Act aims to encourage investments in new and emerging industries and foster technological advancements.   Tax Relief for Companies During COVID-19 Pandemic: In response to the economic challenges posed by the COVID-19 pandemic, the Finance Act 2020 granted specific tax reliefs to companies. These include temporary reduction of minimum tax rates, incentives for donations to COVID-19 relief funds, and exemptions for certain medical supplies.   Capital Allowances and Investment Tax Credit: The Act introduced revised capital allowances and investment tax credits to incentivize capital investments in qualifying assets. Businesses can claim these allowances and credits, reducing their taxable income and supporting capital expenditure.   Conclusion: The tax incentives and reliefs introduced by the Nigeria Finance Act 2020 present valuable opportunities for businesses and individuals to optimize their tax positions and support economic growth. Understanding these provisions is crucial for our prospective clients to leverage available incentives, reduce tax liabilities, and make informed financial decisions. As an audit firm, we are committed to assisting our clients in analyzing and maximizing the benefits of the tax incentives and reliefs offered by the Finance Act 2020, providing them with the knowledge and guidance needed to thrive in the evolving Nigerian tax landscape. For more enquiries on Tax, Accountancy, CAC, Auditing and Assurance Services, Please visit our website www.sunmoladavid.com WhatsApp  +234 803 846 0036