President Muhammadu Buhari sends the Finance Bill 2021 to the House of Representatives for consideration and passage into law for 2021.
The Speaker, Femi Gbajabiamila, read Buhari’s letter at the opening of Tuesday’s plenary.
The bill proposes various amendments to existing tax laws and financial regulations in response to the negative impact of the COVID-19 pandemic on the economy and the current recession.
The Minister of Finance, Zainab Ahmed, had said the bill contained some proposals designed to stimulate the economy.
The 2021 bill is set to amend the provisions of the Capital Gains Tax Act, Companies Income Tax Act, Industrial Development (Income Tax Relief) Act, Personal Income Tax Act, Tertiary Education Trust Fund Act, Customs & Excise Tariff (Consolidation) Act, Value Added Tax Act, Federal Inland Revenue Service (Establishment) Act, the Fiscal Responsibility Act and the Public Procurement Act.
The bill states that Capital Gain Tax on compensation for loss of office would be limited to an amount in excess of N10m threshold.
In the new Finance Bill, ‘agricultural trade or business’ was renamed ‘primary agricultural production’.
The new definition clearly excludes processing and manufacturing of all forms of agricultural products.
Based on the bill, the specialised approach of calculating income tax for international shipping/air transport companies, under Section 14 of CITA, will apply to shipping/transport/freight income.
Non-freight income, leasing, containers and other incidental income is expected to be taxed under Section 9 of CITA, as non-specialised.
The bill also made provision for the reduction of import duties on mass transit buses to check the high cost of transportation on Nigerians.
In the bill, minimum tax rate was reduced to 0.25 per cent of gross turnover less franked investment income. This reduction, which is a COVID-19 incentive, applies to tax returns filed in respect of financial years ending between January 1, 2020 and December 31, 2021.
The bill also made provision for tax deductibility of COVID-19 crisis intervention fund donations as well as the framework for the deductibility of such donations in the future.
It stated specifically that deductibility would be restricted to 25 per cent of assessable profit. Any unrelieved balance may be carried forward for up to a maximum of two years.