How the new finance bill will affect Nigeria’s economy

The newly signed finance bill by President, General Muhammadu Buhari (Rtrd) will have a tremendous effect on Nigeria’s economy in so many ways.

According to TheCable showed that the bill amends 80 provisions across the companies income tax, petroleum profits tax, personal income tax, value-added tax, customs and excise duties, capital gains tax and stamp duties.

The bill, which was signed into law on Monday, has a lot more implications.

Apart from the VAT increase from 5% to 7.5%, here are 15 other implications of the new finance bill.

1. Raise value-added tax to 7.5% from 5%.

2. Businesses must immediately register for VAT: The finance bill provides that businesses must register for VAT filing from the commencement of the business thus cancelling the six months grace period. It defines commencement of business as “the date the first transaction is carried out or first advertises products for sale or first day it delivers or receives a consignment of goods”.

3. Sanitary products may get cheaper: VAT-exempt items have been expanded to include honey, bread, cereals, cooking oils, culinary herbs, fish. flour, starch, fruits, meat, poultry, milk, nuts, pulses, roots, salt, vegetables, water, sanitary pads, tampons, tertiary, secondary, primary and nursery tuition. This may translate to a slight decrease in the prices of these items as VAT is added to the price of items after production.

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1. No more tax on compensations for job losses to an individual now tax-exempt except it exceeds N10 million.

2. Tax identification number (TIN) now compulsory for opening and operating bank accounts.

3. Nigerian companies to pay withholding tax for engaging foreign consultants with significant local economic presence.

4. No more 15% tax credit for companies that replaces obsolete machinery.

5. Dividends, rental income received by real-estate investment companies now exempt from company income tax provided 75% of such income is redistributed within 12 months.

6. All non-resident companies earning income from advertising, marketing, social media platforms etc would be subject to tax on profits realised in Nigeria.

7. Value-added tax will now be paid on services provided by non-resident companies. The bill states that consumers of such services must self-remit if VAT is not included in the invoice.

8. Minimum tax provisions amended to 0.5% of turnover and exemption only applies to small companies (less than 25m turnover), so non-resident companies will now pay minimum tax.

9. Companies with less than N25 million in revenue, to be exempted from VAT and company income tax.

10. Company income tax rate to be lowered from 30% to 20% for medium-sized companies, with revenues from 25 million to 100 million.

11. There will be a bonus of 2% (medium-sized company) and 1% (large-sized company) will apply for early payment of company income tax.

12. The N50 stamp duty on all inflows into accounts to apply to amounts from N10,000 and above.

13. Dividends from oil companies to be taxed