The Finance Bill 2021 has been presented to the National Assembly for deliberation, featuring substantial amendments to 12 different laws, set to take effect in 2022. Here are the key proposed changes introduced by the Finance Bill 2021:

Capital Gains Tax

  1. Disposal of shares of a Nigerian company will attract a 5% Capital Gains Tax unless the proceeds are reinvested within the same year, the disposal proceeds are less than N500m in any 12 consecutive months, or the transfer of shares is under a regulated Security Lending Transaction.

Company Income Tax

  1. For assets used in generating taxable income, only the portion relating to the taxable income shall be allowed for capital allowance if the non-taxable income portion is more than 20% of the total income. This doesn’t apply to companies with pioneer status.
  2. Capital allowance or unabsorbed allowances of small or medium companies will be treated as consumed each year of assessment, except for companies with pioneer status.
  3. Foreign digital companies with significant economic presence in Nigeria engaged in transmitting, emitting, or receiving signals, sounds, messages, images, or data will be assessed under CITA.
  4. Minimum tax to be levied at 0.5% of gross turnover less franked investment income, with specific provisions for returns filed between January 1, 2020, and December 31, 2021.
  5. Lottery and gaming businesses, including betting and gambling, will now be taxable under CITA.
  6. Collection of tax shall be suspended if an objection or appeal is yet to be determined, but undisputed tax assessments should be paid.
  7. Withholding Tax on interest earned from a unit trust shall be the final tax.
  8. Profit from goods exported by petroleum companies, including Midstream and Downstream activities, will not be exempt from tax.
  9. The definition of a real estate investment company now includes Real Estate Unit Trust.

Federal Inland Revenue Service Establishment Act

  1. A penalty of N2,000,000 for each return not filed or providing incorrect information, payable for each quarter of default.
  2. FIRS to use third-party technology for tax administration, with penalties for non-compliance.

Nigeria Police Trust Fund (Establishment) Act

  1. FIRS ACT to apply to the administration, assessment, collection, accounting, returns, and enforcement of the NPTF levy of 0.05% of profit after tax.

Personal Income Tax Act

  1. A contract for deferred annuity removed as a personal relief for PIT purposes.
  2. Banks contravening sections 47 and 49 of PITA to face a penalty of N2,000,000 for each incorrectly filed return.
  3. Penalty of N20,000 and N2,000 per day for individuals contravening PITA provisions without specified penalties.

Tertiary Education Trust Fund Act

  1. Tertiary Education Tax to be payable within 30 days of service of assessment.

Stamp Duties Act

  1. Minister of Finance to make regulations for the imposition, administration, collection, and remittance of stamp duty and Electronic Money Transfer levies.

Value Added Tax Act

  1. Non-residents making taxable supplies to persons in Nigeria to register for, charge, collect, and remit VAT to FIRS. VAT only to be withheld if the non-resident or its agent fails to collect it.
  2. Exemption from VAT registration for small companies to exclude those engaged in upstream petroleum operations, regardless of turnover.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.