Senate passes Finance Bill, 2 weeks after transmission

The Senate on Tuesday passed Finance Bill 2021, transmitted to the National Assembly by President Muhammadu Buhari, on December 7, 2021.

Approval of the bill two weeks later followed the consideration of a report from the Joint Finance Committee; Customs, Special Taxes and Duties; Trade and Investment.

The Chairman of the Joint Committee, Solomon Adeola, in his presentation, said that the bill seeks to support the implementation of the Federal Budget for Economic Growth and Sustainability 2022 by proposing tax, customs, special, fiscal and other key specific relevant laws.

According to the legislator, a total of twelve laws were amended under the finance bill that contains thirty-nine clauses.

He added that the bill seeks to promote tax equity, align national tax laws with global best practices, introduce tax incentives for infrastructure and capital markets, support small businesses, and promote increased government revenue.

“The Finance Law of 2020 was essentially based on having no new taxes or new incentives due to the impact of COVID-19 on the economy, as such, it was structured in four broad thematic areas; Promulgate counter-cyclical measures and crisis intervention initiatives; Tax, fiscal responsibility and public procurement reforms; Reform tax incentive policies for job creation; Ensure closer coordination of monetary, trade and fiscal policies; and Improvement of the tax administration ”, said Adeola.

Accordingly, the Joint Committee, based on its observations, recommended that a capital gains tax of 5 per cent be imposed on share alienation transactions where the proceeds exceed N250 million in 12 calendar months.

He recommended that gambling and lottery companies be taxed, as well as oil and gas companies.

He underscored the need for Midstream and Downstream oil and gas companies to be subject to corporation tax without the benefit of tax breaks for companies that export goods to earn foreign exchange.

The Committee noted that doing so would avoid double dipping by gas utilization companies, so they cannot claim both (1) 3-year tax holidays; as well as (2) Incentives from the Oil Income Tax Law or (3) pioneering tax holidays under IDITRA.

The Joint Committee advocated qualification of capital expenditure rules for small and pioneering companies, in order to avoid double-dip by requiring companies to not be able to deduct qualified capital expenditures to reduce their taxable profits when using the capital expenditures. qualified capital expenditures to generate tax-exempt income.

He sought more powers for the Federal Internal Revenue Service (FIRS) to collect NPTF levies from Nigerian companies on behalf of the fund and expedite the collection of taxes from Nigerian companies in accordance with the ease of President Buhari’s administration to do business reforms.

The Joint Committee also insisted on the need for the Federal Government to ensure that FIRS implements both proprietary and third-party technology applications to collect taxpayer information, improve confidentiality and nondisclosure, and allow them to investigate tax evasion and other crimes and sanction no – compliant taxpayers.

In addition, it requested that FIRS be empowered to assess non-resident companies to tax on a fair and reasonable billing basis on billing obtained from digital services to Nigerian customers, with an additional mandate to designate individuals in order to collect and send to non-residents. taxes.

The Committee demanded the necessary reforms in securities lending operations, Minimum Tax for Insurance Companies and Companies in general, Taxation of Trust Unit Income, Real Estate Investment Trust and Capitalization of Insurance Companies by NAICOM in line with the Fiscal Equity.

He urged the government to direct FIRS as the Lead Tax Revenue Collection Agency to collaborate with other law enforcement MDAs in streamlining tax collection through improved Public Finance Management reforms.

According to the Joint Committee, doing so would reduce revenue leakage and better track actual expenditures based on revenue performance in accordance with the provisions of the 1999 Federal Republic of Nigeria Constitution (as amended), tax rules and other laws on existing money.

He also called for the diversification of Nigeria’s income from the oil sector to other sectors to finance critical expenditures.

The Committee, while demanding a 0.5 percent increase in the education tax, lobbied for closely monitoring development and policies on VAT, tax incentives, a projected rate increase for tobacco, alcohol and beverages. carbonated to fund vital spending on health, education and security, with a possibility of introducing new taxes, duties and levies as the economy recovers.

Meanwhile, the Senate also passed a bill Tuesday to amend the Appropriations Act of 2021.

The bill sponsored by Senate Leader Yahaya Abdullahi went to a second and third reading after it was considered during plenary.

The 2021 Appropriations Act (Amendment) bill seeks to extend the implementation of the Capital aspect of the 2021 Appropriations Act from December 31, 2021 to March 31, 2022.