Finance bill: Bank accounts to require tax identity
Nigerians who want to open or maintain accounts with Deposit Money Banks will not have to provide their Tax Identification Number to do so.
The Federal Government is also proposing raising the minimum online banking transaction that will attract stamp duty from the current N1, 000 to N10, 000.
Organisations that pay their taxes not less than 90 days before the due date may also get bonuses between one and two per cent.
These are some of the proposals in the Tax and Fiscal Law (Amendment) Bill, also known as the Finance Bill, currently before the National Assembly.
The executive bill seeks to amend the Petroleum Profit Tax Act, Customs and Excise Tariff Act, Company Income Tax Act, Personal Income Tax Act, Value Added Tax, Stamp Duties Act and the Capital Gain Tax.
Chairman of the House Committee on Finance, James Faleke, while explaining each of the amendments, also listed their benefits to the economy.
Faleke said, “Excess dividend tax to apply only to untaxed distributions other than the profits specially exempted from tax and franked investment income
“Small businesses with turnover less than N25m to be exempted from the Companies Income Tax. A lower CIT rate of 20 per cent to apply to medium-sized companies with turnover between N25m and N100m.”
Other benefits include onus of two per cent of tax payable (medium-sized companies) and one per cent for large companies for early payment of CIT; introduction of thin capitalisation of 30 per cent of EBITDA for interest deductibility.
Any excess deduction can also be carried forward for five years.
The lawmaker added that the meaning of ‘supply’ and definition of ‘goods and services’ had been expanded to cover intangible items other than land, among others.
He stressed the amendments would also cover “specific requirement for VAT deregistration for discontinuing operations.”
BDCs, CITN, LCCI kick issues against proposals
Meanwhile, no fewer than three bodies rejected the proposed amendments in the bill.
They included the Association of Bureaux De Change Operators of Nigeria, Chartered Institute of Taxation of Nigeria and the Lagos Chamber of Commerce and Industry.
A representative of ABCON, Mike Akinfolarin, made a presentation on behalf of the forex traders.
He said, “By the provisions of the VAT Act CAP VI, Laws of the Federation of Nigeria 2004, VAT is only chargeable on the end users, wherein the present CBN Regulatory Policy on forex trading does not allow our client’s members to charge VAT on their customers who are the ultimate end users.
“A close look at the forex operations in the United State of America and the United Kingdom, suggests that VAT is not charged on forex operations whatsoever as it is equally obtainable in other international climes, except Nigeria.”
Also, the Oil Producers Trade Section of the LCCI raised issues against the bill, in a presentation by the Chairman, OPTS, Paul McGrath.
McGrath said the OPTS observed that the bill contained some positive provisions meant to encourage small and medium companies to flourish and digitalise communications.
He said, “The OPTS has identified some key areas of concern that have the potential to further erode Nigeria’s competitiveness.
“For investors, it does not make a difference whether returns are decreased by an income tax or a dividend withholding tax; both taxes reduce returns.
“The OPTS suggests that this proposal be removed from the bill and, instead, considered within the wider context of a Petroleum Industry Bill, so that its full implications for all stakeholders can be assessed and decided upon.”
Similarly, the CITN criticised parts of the bill.
President/Chairman in Council of CITN, Olajumoke Simplice, stated that increasing the VAT rate from five per cent to 7.5 per cent might generate additional revenue to government but might also not address budget deficit if government expenditures were not under control.
Minister of Finance, Budget and National Planning, Zainab Ahmed, in her presentation, noted that while the VAT rate would be increased, the state and local governments would get 85 per cent of the revenue, with the Federal Government getting only 15 per cent.
The minister also noted that the appropriation bill would now be accompanied with finance bill annually.