December 14, (THEWILL) – The Federal Government has proposed a five-year imprisonment or N5 million fine for any staff convicted for failing to remit the gross taxes, levies, revenues, or other monies raised or received into designated accounts without the National Assembly’s approval.
The proposed sanctions were contained in the new Finance Bill that was presented by President Muhammadu Buhari for legislative action.
Some of the proposed reforms in the new Finance Bill 2021 include 5 percent capital gains tax imposed on shares’ disposal transactions where gains exceed N500 million in 12 calendar months; inclusion of gaming, lottery and gambling companies within the corporate tax net; imposition of taxes on oil and gas companies’ dividends as well as midstream & downstream oil and gas companies, among others.
The proposed legislation also seeks to empower the Federal Inland Revenue Service (FIRS) to collect Nigeria Police Trust Fund Levy; sanction non-compliant taxpayers refusing access to IT systems; sanction non-compliant banks that fail to deliver quarterly returns; investigate tax evasion and other crimes as well as streamline tax and levy collection from Nigerian companies in line with the present administration’s ease of doing business reforms.
The Bill also seeks to clarify Qualifying Capital Expenditure (QCE) rules for small firms and pioneer companies; prevent double-dipping such that companies cannot deduct QCE to reduce their taxable profit (and tax payable) where the relevant QCE is used to generate tax-exempt income.
In her presentation, Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, who stressed the need for Nigeria to diversify its revenues from oil to fund critical expenditures, disclosed that federal government’s retained revenue is N4.56 trillion (75 percent of the budget) as at September 2021; federal share of oil revenues – N845 billion (56.3 percent pro-rated performance); N1.31 trillion (117.3 percent above budget) as the federal share of non-oil revenues; N616 billion and N274.4 billion (121 percent and 153 percent of pro-rata targets) of Companies Income Tax (CIT) and Value Added Tax (VAT) and N418 billion Customs collections for the period under review.
She also informed the lawmakers of the possibility of introducing new tariffs and levies in 2022 as the economy continues to recover.
The minister said modest changes have been proposed but that more fiscal reforms were still in view as the ministry could not take all the proposals collected from stakeholders.
”Our aspiration is to do a midterm review with a possibility of another Finance Bill in mid-year 2022 to bring in more amendments,” she said
The Minister said that there are ongoing legal cases in court against the Federal Government on VAT and Stamp Duties which was why the ministry stayed off those areas.
She, however, expressed hope that by mid-2022, the cases might have been dispensed with, and then reforms in those areas could be proposed for parliament to consider.
Ahmed said that there might be a need for parliament to revisit the antiquated stamp duties and capital gains tax for holistic reform.
“We prepared this draft bill along with five reform areas, the first domestic revenue mobilization, the second is tax administration and legislative drafting, third is International taxation, fourth is financial sector reforms and tax equity and fifth is improving public financial management reform.
“The provision in the draft bill is proposing to amend the Capital Gains Tax Act, Company Income Tax, FIRS Establishment Act, Personal Income Tax, Stamp Duties Act and Tertiary Education Act, Value Added Tax, Insurance Police Trust Fund, and the Fiscal Responsibility Act.
“This is to amend the Police Trust Fund Act and the Nigerian Trust Fund Acts, the purpose is to empower the FIRS to collect the Nigerian Trust Fund levies on companies on behalf of the fund itself.
“Currently, because there is no such provision, the FIRS is unable to start collecting on behalf of the fund. Also, it is to streamline the tax and the levy collection from the Nigerian companies in line with Mr. President’s administration’s ease of doing business policy.
“So we do not have NASENI going out to collect that tax, the FIRS will collect on their behalf during their collection process and it will be passed through to them,” she said.
While declaring the public hearing open, the Speaker of the House of Representatives, Hon Femi Gbajabiamila, said the 2021 Finance Bill seeks to introduce strategic and broadminded, positive reforms that will engender best practices and guarantee the interest of the investing public and businesses.
He said the bill seeks to statutorily check borrowing by local, state, and federal governments, and enhance transparency and accountability in the administration in various strata of tax and public revenue generation.
“It is instructive to state that the essence of the 2021 bill is to further reposition our finance system to plug wastes, close openings for corruption, create opportunities for employment as well as stimulate stability and growth in our productive sectors, within the wider context of our quest for economic recovery in our country.
“Given the democratic credentials of the House of Representatives under my watch as well as the need to further deepen the credibility of the process through wider participation of stakeholders, this stakeholders meeting has been designed to give Nigerians and critical stakeholders in the industry the ample opportunity to own and drive the process.
“In this hall, we have very proficient professionals and experts, who as stakeholders, investors, development partners, and interest groups have submitted memoranda and are ready to make contributions to the bill.
“It is on this backdrop that I charge this stakeholders meeting to extensively scrutinize the templates in the bill in the general interest.
“We must strengthen the institution to strategically check reckless borrowings by ensuring accountability in the use of borrowed funds and ensuring that the borrowings shall be on concessional terms or at relatively low-interest rates and subject to the rigorous of legislation,” he said..
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