The Federal Executive Council (FEC) on Wednesday approved the Finance Bill 2020 at a virtual meeting presided over by President Muhammadu Buhari.
However, the Minister of Finance, Budget and National Planning, Zainab Ahmed has assured Nigerians that the bill which will now be forwarded to the National Assembly for consideration and approval will not increase the tax burden on Nigerians.
Particularly, she assured that there will be no increase in taxes and no increase in VAT.
She explained that the government recognizes that it is not a time to increase taxes in the country, adding that the focus of the bill is to ensure improvement in tax laws.
Ahmed noted that some provisions of the law would even guarantee a reduction in taxes particularly for small and medium scale enterprises.
She said: “through this finance bill, what we are seeking to do is to make incremental changes to tax laws relating to Customs and Excise as well as other fiscal laws to support the implementation of annual budget.
“When Mr. President presented the 2021 budget to the parliament he did direct that the 2020 Finance Bill will also follow to support the budget proposals.
“We are working on implementing current fiscal reforms in line with the Multi-year Medium Term framework and over time we hope that this Finance Bills, that the fiscal space will be reformed on an incremental basis.
“So, this Finance Bills for 2020 was developed as a result of a very large multi-stakeholder effort under Fiscal Policy Reform Committee that has several ministries, departments and agencies as members but also the private sector, experienced tax practitioners and academics.
“During the process, we received a lot of suggestions from different stakeholders but we had to limit what we could take because, we are by three principles – to adopt appropriate counter fiscal measures to manage the economic slowdown, incrementally reforming the fiscal incentive policies of government and ensuring closer coordination between the monetary trade as well as fiscal authorities.
Naija News understands some provisions of the Bill include “to consider how we will have adequate macroeconomic strategies to attract investment, to be able to grow the economy on a sustainable basis but also to create jobs as the immediate fiscal strategies to put in place accelerate domestic revenue mobilization in response to COVID-19 pandemic and the recent decline in the economy.
“In producing this bill, what we were inadvertently doing was amending provisions in 13 different taxes which include the Capital Gains Tax Act, Companies Income Tax Act (CITA), Industrial Development (Income Tax Relief) Act (IIDITRA), Personal Income Tax Act (PITA), Tertiary Education Trust Fund Act, Customs & Excise Tariff (Consolidation) Act, Value Added Tax Act (VATA), Federal Inland Revenue Service (Establishment) Act, the Fiscal Responsibility Act and the Public Procurement Act.
“Some highlights of these provisions include: amendments that we have had to make to provide incremental changes to tax laws. These amendments include providing fiscal relief for corporate tax payers, for instance by reducing the applicable minimum tax rate for two consecutive years. So, from 0.5 percent to 0.25 percent.
“These reforms will commence and will also be closely followed by the cessation rules for small businesses as well as providing incentive for mass transits by reducing import duties and the levies for large tractors, buses and other motor vehicles.
“The reason for us is to reduce the cost of transportation which is a major driver of inflation especially food production. We also have proposed measures to create a legal instrument that supports a crisis intervention fund such as, the crisis intervention that we have had to put in place for COVID-19. So, we hope that we don’t have other crisis but we need to create such a fund so that it is available and it is legislated.
“We are also amending the Fiscal Responsibility Act to enhance fiscal efficiencies and also to control the cost revenue ratios of government owned enterprises, so that we will be able to realize more operating surpluses from these enterprises. Let me remind you that in the 2019 bill, we actually reduced taxes from 30 percent to 20 percent for medium enterprises and from 30 percent to zero percent for very small or macro enterprises. These reductions in taxes is being reinforced in the 2020 Finance Bill by further removing the education tax of two percent that the smallest businesses still have to pay despite their zero payment of company income tax.
“There are a lot of provisions in this bill, we will be publishing the summary of the draft bill on our various websites the moment Mr. President conveys the bill to the parliament so that we get inputs from the citizens as the parliament undertake its own review processes.”
Source: Naija News